Money-Market Rates Climb to Records, BOE Relaxes Funding Rules

[RedEarth]

Source: (Bloomberg)

Oct. 3 (Bloomberg) -- Money-market rates jumped to records and the Bank of England relaxed borrowing rules for financial institutions as ``extraordinary'' strains deepened the credit freeze.

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in euros climbed to 5.33 percent today, an all-time high, the British Bankers' Association said. The corresponding rate for dollars increased to 4.33 percent, the most since January. The Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record and Asian bank rates climbed to the highest levels in at least nine months.

``Nobody is willing to lend to anybody for any length of time, not even a month,'' said Robert Ried, president of Jersey City, New Jersey-based Ried, Thunberg & Co., a unit of ICAP Plc, the world's largest inter-dealer broker. ``This is going to inhibit growth. It's beginning to look as if the recession will be long and deep.''


Economic Disruptions

Disruptions springing from the worst meltdown in financial markets since the Great Depression are rippling through the economy. The U.S. lost the most jobs in five years last month and earnings rose less than forecast as the slowdown deepened, government data showed today. Payrolls fell a more than predicted 159,000, the Labor Department said.



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