Three-month Libor sees biggest drop since 2009
The three-month rate at which banks on average charge each other to borrow funds fell around 4.1 basis points to 2.697% on Thursday, its biggest one-day drop since May 2009, according to ICE Benchmark Administration. Trillions of debt and loans are benchmarked to Libor , or the London Interbank Offered rate. Some analysts speculated that the Federal Reserve's hints that it would keep rates on hold for the foreseeable future at its January meeting contributed to the fall in money market rates. "Not only are rates not rising, in some places rate 'cuts' are already being reflected. Our sense is that the move largely represents the market catching up to cash rates, though the speed and severity of the adjustment were faster than presumed," wrote Jon Hill, an interest-rate strategist at BMO Capital Markets. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.