Interbank lending rates soar

Interbank lending rates soared in March, despite a further 75-basis-point cut by the Federal Reserve on March 18 and two new initiatives by the US central bank to pump liquidity into the money markets.

The Ted spread peaked at above 200bp on March 19 before falling back to 142bp on March 27. The Ted spread is the difference between three-month Libor and the risk-free rate on three-month US Treasury bills, and is used as a measure of the perceived risk of interbank lending.

The Ted spread has