Historical LIBOR Rate

LIBOR is the interest rate that banks charge each other for one-month, three-month, six-month and one-year loans. LIBOR is an acronym for London InterBank Offered Rate. This rate is that which is charged by London banks, and is then published and used as the benchmark for banks rates all over the world.

LIBOR is usually a few tenths of a point above the Fed Funds rate. However, in April 2008, the 3-month LIBOR rose to 2.9% even as the Fed dropped interest rates to 2%. Banks started to panic when the Fed had to bail out Bear Stearns, which was going bankrupt due to investments in subprime mortgages. Throughout the spring and summer, bankers became more hesitant to lend to each other, reacting to fears they would inherit each others' subprime mortgages as collateral or would not get paid back on their loans. LIBOR rose steadily to indicate the higher cost of borrowing. On October 8, 2008, the Fed dropped the Fed Funds rate to 1.5%, but LIBOR continued rising to a high of 4.8% on October 13. In response, the Dow dropped 14% in October.

What Are the Historical LIBOR Interest Rates

Here are the historical LIBOR rates compared to changes in the Fed Funds rate since 2006. It shows how LIBOR diverged slightly in the fall of 2007, and then really diverged in the Spring of 2008. It has recently returned to more normal levels in response to Federal Reserve measures to restore liquidity. (See TALF Program Loosens Credit)

Historical LIBOR Rates

Date	Fed Funds Rate	LIBOR Rate
Jun 17 2009	0	.61
Mar 31 2009	0	1.73
Dec 5 2008	1.00	2.19
Oct 29 2008	1.00	3.46
Oct 8 2008	1.5	4.3
Apr 30 2008	2.00	2.9
Mar 18 2008	2.25	2.6
Jan 30 2008	3.5	3.8
Jan 22 2008	3.00	3.2
Dec 11 2007	4.25	5.1
Oct 31 2007	4.5	4.9
Sep 18 2007	4.75	5.6
Jun 29 2006	5.25	5.5
May 10 2006	5.00	5.2
Mar 28 2006	4.75	5.00
Jan 31 2006	4.5	4.7