LIBOR: The Definition of LIBOR

The London InterBank Offered Rate, or LIBOR, is the average interest rate charged when banks in the London interbank market borrow unsecured funds from each other. There are many different LIBOR rates (maturities range from overnight to 12 months) for numerous currencies, including U.S. dollars. This page lists LIBOR rates that are fixed for U.S. dollar-denominated deposits in the London wholesale money market, also known as Eurodollars (Eurodollars are basically U.S. dollars that are deposited in any bank outside the United States, and are therefore not subject to regulation by the U.S. Federal Reserve.) In the United States, the most common LIBOR maturities used in pricing loans -- 1, 3, 6 and 12 months -- can be found below.

Back in the mid-1980's, the world banking system adopted the LIBOR as a much needed benchmark for short-term, interbank loans. The LIBOR rates are now internationally recognized indexes used for pricing many types of consumer and corporate loans, debt instruments and debt securities across the globe. For example, LIBOR is used as an index for the vast majority of interest-only loans in The United States.

LIBOR rates are fixed every UK business day by the global media corporation Thomson Reuters, in association with the British Bankers' Association (BBA), a nonprofit trade association.

The Fed Funds Target Rate, America's benchmark interest rate, and the U.S. Prime Rate are controlled by America's central bank: the U.S. Federal Reserve. The LIBOR rates, however, are not controlled by England's central bank, or any other central bank for that matter. Scroll down this page to read about how LIBOR is fixed.

Current LIBOR Rates§
Maturity	Rate (%)
One-Month LIBOR	0.24156
Three-Month LIBOR	0.27406
Six-Month LIBOR	0.55
Twelve-Month LIBOR	1.16125
The above-listed LIBOR rates were updated on November 6, 2009±. Source: WSJ
The Current Prime Rate	3.25%
The Current Target Range for the Fed Funds Rate	0% - 0.25%
Chart: U.S. Prime Rate vs. Fed Funds Target Rate vs. 1-Month LIBOR vs. 3-Month LIBOR
How U.S. Dollar (Eurodollar) LIBOR Works How does the BBA (and Thomson Reuters) fix LIBOR rates denominated in U.S. dollars? Just before 11:00 a.m. GMT, it polls a specific panel of highly reputable, high-volume banks which participate in the London wholesale money market. The BBA finds out the rate at which each bank on the panel could borrow Eurodollars from other banks, for specific maturities. The BBA figures out the central tendency -- the interquartile mean -- for each maturity, then publishes these rates at about 11:30 a.m. GMT. The American banks included in the panel surveyed by the BBA for U.S. dollar fixing are: The Bank of America JP Morgan Chase Citibank, NA There are 13 non-U.S. banks surveyed for U.S. dollar fixing in London. These banks are: Bank of Tokyo-Mitsubishi UFJ Ltd Barclays Bank plc Credit Suisse Deutsche Bank AG HBOS HSBC Lloyds TSB Bank plc Rabobank Royal Bank of Canada The Norinchukin Bank The Royal Bank of Scotland Group UBS AG West LB AG For more on how LIBOR works, click here.
± = The table below lists bank holidays in the United Kingdom. There will be no updates for the above-listed LIBOR rates on these days:
Bank Holidays In The UK: 2009 New Year's Day January 1 Good Friday April 10 Easter Monday April 13 Early May Bank Holiday May 4 Spring Bank Holiday May 25 Summer Bank Holiday August 31 Christmas Day December 25 Boxing Day December 28