[Merlyn]

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Keep watching the LIBOR rate note what this article is saying:

Credit barely eases after Fed plans to buy paper
Tuesday October 7, 6:01 pm ET
By Madlen Read, AP Business Writer
Credit markets show scant relief on Fed plan to buy commercial paper; bank lending rates jump

The London Interbank Offered Rate, or LIBOR, for overnight dollar loans jumped to 3.94 percent on Tuesday from 2.25 percent Monday. LIBOR for three-month dollar loans rose at 4.32 percent, near its nearly nine-month high.

Both rates are well above the Fed's target rate for overnight loans of 2 percent. LIBOR is important not only because it indicates how willing banks are to lend, but also because many consumer rates are tied to it, including adjustable-rate mortgages.

In a sign of how much financial institutions have pulled back their lending, consumer borrowing fell in August for the first time in more than a decade.

On Monday, to address the rise in LIBOR, the Federal Reserve doubled its one-month loan and three-month loan offerings. Those moves and others brought the total amount of credit potentially outstanding through year end to $900 billion, the Fed said.

Complete article at:
http://biz.yahoo.com/ap/081007/credit_markets.html

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