Fed does U-turn on SOFR loans

Libor rates to be used instead for four-year emergency lending schemes

The US Federal Reserve has agreed to ditch the secured overnight financing rate, or SOFR, as the benchmark for its emergency loans in response to the Covid-19 pandemic, deciding to use US dollar Libor as the reference rate instead.

The central bank had originally wanted to use its preferred replacement for Libor in its two Main Street Lending Programs for new loans and expanded loans when it released details on April 9. But pushback from the industry prompted a rethink at the Fed.

“The Federal