(Adds J.P. Morgan quote, LIBOR forecast)
Feb 11 (Reuters) - A key gauge of interbank borrowing costs on Monday fell to its lowest level since November, resuming its decline spurred by bets the U.S. Federal Reserve would not raise interest rates in 2019 and perhaps might even lower rates by year-end.
The London interbank offered rate (LIBOR) to borrow dollars for three months decreased almost 0.98 basis point to 2.68800 percent, the lowest level since Nov. 21.
Last Thursday, it tumbled about 4.1 basis points, which was the biggest one-day drop since a 5.5 basis point decline 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.
LIBOR and most other money rates have fallen as investors have piled into money market funds, buying short-term debt from banks and other companies which has driven down their funding costs, analysts said.
“Overall, investors continue to have ample cash to put to work against a backdrop of stable interest rates and limited supply,” J.P. Morgan analysts wrote in a research note published late on Friday.
They projected three-month LIBOR would fall to 2.60 percent in the first quarter before rising to 2.75 percent in the second quarter, 2.85 percent in the third quarter and 3.10 percent in the fourth quarter.
J.P. Morgan analysts cautioned LIBOR would rise if the federal borrowing limit is reinstated and Treasury bill supply accelerates.
In December, LIBOR reached its highest in more than decade, propelled by rate increases by the Fed, rising U.S. government borrowing and a shrinking Fed balance sheet.
On Jan. 30, 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 Editing by Alistair Bell