Jan 18 (Reuters) - A key gauge of interbank interest rates decreased on Friday to its lowest in 6-1/2 weeks as traders expect short-term borrowing costs to decline on worries about slowing economic growth and the U.S. Federal Reserve being in no hurry to raise rates.
The London interbank offered rate (LIBOR) to borrow dollars for three months fell to 2.76100 percent, a level not seen since Dec. 4. It was down nearly 1.5 basis points from the day before, recording its biggest drop since Aug. 10.
On the week, three-month dollar LIBOR has dropped 2.6 basis points, marking its steepest weekly fall since the week of May 11.
LIBOR is the benchmark rate for $200 trillion of dollar-denominated financial products, mainly interest rate swaps and floating-rate loans.
LIBOR reached its highest in more than decade in December, propelled by rate increases by the Fed, rising U.S. government borrowing and a shrinking Fed balance sheet.
LIBOR has been retreating on expectations the Fed might slow its rate hikes, or even stop raising rates in 2019, to counter evidence of easing off in housing and business activities even as the domestic jobs market has remained tight, analysts said.
Reporting by Richard Leong Editing by Paul Simao and Jeffrey Benkoe