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| Version 0 | Version 1 |
|---|---|
| Cash rescue plan helps rates fall | Cash rescue plan helps rates fall |
| (10 minutes later) | |
| A surprise move by the Bank of England, the US Federal Reserve and three other central banks to inject cash into money markets has had an immediate effect. | A surprise move by the Bank of England, the US Federal Reserve and three other central banks to inject cash into money markets has had an immediate effect. |
| The London Interbank Offered Rate, or Libor, fell to 6.514% from 6.627%. | The London Interbank Offered Rate, or Libor, fell to 6.514% from 6.627%. |
| If the rate had not fallen, it was feared that banks would pass the costs on to consumers, making loans more expensive and slowing economic growth. | If the rate had not fallen, it was feared that banks would pass the costs on to consumers, making loans more expensive and slowing economic growth. |
| Banks have become nervous about lending money because of heavy losses linked to problems in the US mortgage market. | Banks have become nervous about lending money because of heavy losses linked to problems in the US mortgage market. |
| 'Cautious' | |
| As the year end approaches, financial institutions have been hoarding money to cover their potential losses, say bank analysts. | As the year end approaches, financial institutions have been hoarding money to cover their potential losses, say bank analysts. |
| "Worries about liquidity at year end can become self-fulfilling," said Leigh Goodwin, bank analyst at Fox-Pitt Kelton. | |
| The analyst added that banks' fears are especially heightened this year because they "think it will be tight, so they are cautious and less inclined to lend". | |
| Five central banks said on Wednesday that they would make $110bn (£54bn) available to banks in order to ease their concerns about losses and add liquidity to money markets. | |
| The move was seen as a way to improve investor confidence following market volatility as well as a step to boost liquidity. | |
| The lending rate for sterling was not the only rate to be lowered. | The lending rate for sterling was not the only rate to be lowered. |
| The three month dollar rate for US dollars fell to 4.99% from 5.0575%, while the rate for euros dropped to 4.9494 from 4.9525. | The three month dollar rate for US dollars fell to 4.99% from 5.0575%, while the rate for euros dropped to 4.9494 from 4.9525. |
| Though some analysts had expected rates to come down they said it would not happen until early 2008. |