London Interbank Offered Rate (LIBOR)

(LIBOR) rose for the fourth straight session, rising roughly 2.5 basis points to 2.83229%, the highest since November 2008.

What Is London Interbank Offered Rate (LIBOR)?

It is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
It acts as a well-recognized important benchmark interest rate that represents the cost of borrowing for banks.
It is administered by the Intercontinental Exchange, which queries the biggest international banks about the short-term borrowing rates, which they would impose on other banks.

Rate calculation: The Waterfall Methodology, a standardized, transaction-based, data-driven, tiered approach, is used to calculate the rate.

Replacement: Due to manipulation, scandal, and methodological criticism, it is no longer regarded as a reliable benchmark rate.

On June 30, 2023, it will be replaced by the Secured Overnight Financing Rate (SOFR), with a phase-out of its use starting in 2021.

Source: The Hindu

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