LIBOR Surges Above 5% on Fed’s Hawkish Turn, Raising Market Concerns
The London Interbank Offered Rate (LIBOR) has cracked the 5% mark for the first time since 2007, following the US Federal Reserve’s recent hawkish turn. The Fed’s decision to signal a faster pace of interest rate hikes in the coming months has raised concerns about the impact on global financial markets, particularly those that are heavily reliant on US dollar funding.
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Fed Unlikely to Hike Rates by 50 Basis Points in March
The LIBOR, which is used as a benchmark for trillions of dollars worth of financial contracts around the world, has been steadily rising in recent months. However, the recent surge above 5% has caught many analysts off guard, raising concerns about the potential for a wider market sell-off.
Some experts believe that the Fed’s decision to accelerate its pace of interest rate hikes could lead to a repeat of the “taper tantrum” that occurred in 2013, when the central bank’s decision to taper its bond-buying program triggered a sharp sell-off in global markets.
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While the situation remains fluid, many investors are closely watching developments in the LIBOR and other key financial markets, as they seek to gauge the potential impact of the Fed’s hawkish turn on the global economy.
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