Dollar Libor leads the way down after Fed rate cut

The Fed cut its target federal funds rate to 1% yesterday, citing slowing consumer spending, lower business spending and industrial production, a poor outlook for US exports and gloomy prospects for the credit markets. Declining energy and commodity prices meant that inflation was set to fall, it added.

In the overnight markets, US dollar Libor dropped significantly from 1.14% yesterday to 0.73% today, a 41bp fall. Sterling and euro Libor both fell, from 4.8% to 4.74% and 3.54% to 3.53%