Dollar LIBOR records biggest drop in a month

March 19 (Reuters) - A key gauge of interbank borrowing costs for dollars on Monday posted its biggest daily fall in a month ahead of the U.S. Federal Reserve's two-day meeting where policymakers are widely expected to leave interest rates unchanged.

The London interbank offered rate (LIBOR) to borrow dollars for three months fell to 2.61275 percent, down nearly 2 basis points, its steepest one-day decline since Feb. 18.

Three-month LIBOR had risen for four straight sessions, partly on expected loan demand for U.S. quarterly corporate tax payments in mid-June.

LIBOR is the benchmark rate for $200 trillion worth of dollar-denominated financial products, mainly interest rate swaps and floating-rate loans.

In December, LIBOR reached its highest in more than a decade at 2.82375 percent, propelled by Federal Reserve interest rate increases, rising U.S. government borrowing and a shrinking Fed balance sheet.

In late January, the Fed said it would be "patient" before ratcheting key lending rates higher. Fed Chairman Jerome Powell said the case for rate increases had "weakened" in recent weeks.

The U.S. central bank also signaled it was prepared to adjust the normalization of its balance sheet.

(Reporting by Richard Leong)

2019-03-19 15:13:23

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