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What is LIBOR?

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Quick Answer

LIBOR, or the London InterBank Offered Rate, is the benchmark interest rate that banks use when charging other banks for one-, three- and six-month loans, as well as one-year loans. LIBOR is published every day at 11 a.m. by Reuters.

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Full Answer

LIBOR is used as a benchmark for banks around the world and is published in five currencies: the euro, the pound sterling, the Japanese yen, the U.S. dollar and the Swiss franc. LIBOR is used to set rates for adjustable-rate loans as well as to base the price for credit default swaps. A rising LIBOR rate causes consumer and business loans to be more expensive and can create a recession if rates remain high.

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