Libor spread sinks to pre-crisis levels

The spread between the most commonly quoted interbank rate for dollar loans and the overnight indexed swap (OIS) rate returned to its pre-crisis level on Tuesday.

The spread between the London Interbank Offered Rate (Libor) for three-month dollar loans and the OIS (which chart overnight borrowing costs and so remove expectations of changes to policy rates) narrowed by a basis point to 0.11 percentage points, its average level in the run-up to summer 2007, after the Libor fell to 0.293%.

The thre

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