U.S. LIBOR breaks above 1 percent

The rate banks charge each other to borrow dollars for three months rose above 1 percent on Wednesday for the first time since May 2009 as global interest rates extend their climb on expectations of accelerating growth and inflation.

The London interbank offered rate, or LIBOR, for three-month dollars USD3MFSR= was fixed at 1.00511 percent, the highest level since 1.00688 percent on May 1, 2009, which was also the last date the rate topped 1 percent.

That compared with Tuesday’s rate of 0.99872 percent.

Libor is a global rate benchmark for $350 trillion worth of financial products worldwide.

Investors upgraded their outlook on business activity following Donald Trump’s victory in the U.S. presidential election, anticipating that a Republican-controlled White House and Congress would slash taxes, implement infrastructure spending and loosen regulations.

That rosier view is also coupled with the Federal Reserve’s signal last month that it might raise interest rates up to three times in 2017 as the economy approaches full employment and inflation heads toward its 2 percent goal.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell