Is LIBOR linked to savings deposit rates?
I am writing a paper due friday and I can’t find any clear information on that…
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LIBOR is basically the rate at which banks are lending each other money to overnight. This will usually be a bit higher than the fed fund rate (which is usually what the “risk-free” rate is considered). Historically this was printed in the market by surveying a group of banks and cutting the high and low print. We’re moving away from this since there were some scandals with banks misrepresenting what the actual rate was for personal gain.
In terms of saving deposit rates (assuming you mean the rate at which a consumer can get by parking their money in a savings account) I wouldn’t really call them linked since for most banks they don’t move. But good money market accounts should offer a rate that I assume track decently with the overall rates environment, though this is due to market dynamics and not necessarily something that they NEED to do.
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