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Letter L
LIBOR
London Interbank Offered Rate is the rate at which banks notionally buy and sell
money to each other. It varies from day to day and is closely linked to Base
Rate.
The relationship of LIBOR to base rate can give an indication of the possible
future direction of base rates. If LIBOR is significantly above base rate it
indicates that the money market believes interest rates are about to increase.
If it is significantly below, the reverse is true.
The key LIBOR rate is 3 month LIBOR, however rates are also quoted for one, six
and twelve month periods.
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