Interbank lending benefits from rates cuts

The sterling interbank borrowing rate has dropped significantly after the Bank of England's (BoE) move to cut interest rates to their lowest levels since 1951 on Thursday.

The rate cut of 100 basis points to 2% was the second in less than a month; the Bank previously slashed rates by 150bp on November 6.

Overnight sterling Libor plummeted from 3.01% on Monday to 2% this morning, while three-month sterling Libor fell from 3.88% to 3.38% over the same period. The repo rates on sterling also dropped yesterday from Monday's levels: overnight rates fell from 2.87% to 1.73%, and three-month rates from 1.84% to 1.6%.

The European Central Bank (ECB) also cut its key

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