June 21, 2019 / 12:33 PM / a month ago

MONEY MARKETS-Dollar LIBOR edges up from nine-month low

June 21 (Reuters) - The interest rate that banks charge each other to borrow dollars for three months ticked up from a nine-month low on Friday, after posting its steepest one-day drop in a decade prompted by the Federal Reserve’s signal it was ready to lower interest rates.

The three-month London interbank offered rate climbed to 2.34925% from 2.34313%, the lowest level since Sept. 18. On Thursday, it fell 4.3 basis points, marking its biggest single-day fall since a 5.5 basis point drop on May 21, 2009.

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

The Federal Open Market Committee, the central bank’s rate-setting group, said on Wednesday it “will act as appropriate to sustain” the economic expansion.

In early U.S. trading, federal funds futures implied traders saw a 100% likelihood the Fed would cut the target range on short-term interest rates by a quarter point to 2.00%-2.25% at its next policy meeting next month, CME Group’s FedWatch program showed.

The fed funds complex implied traders are pricing in about a 25% possibility that the Fed would lower short-term rates by at least 100 basis points by year-end, down from 30% late on Thursday, according to CME FedWatch.

Reporting by Richard Leong Editing by Chizu Nomiyama

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