How to Read a LIBOR Index

LIBOR is an acronym for London Interbank Offered Rate: a rate of interest calculated based on the information provided by London banks. A group of banks from the British Bankers' Association (BBA) respond daily to a speculative question regarding how much it would cost them to borrow a specific amount of money over various short time periods: one month, three months, six months or a year. The answers provided by the banks help calculate the LIBOR index.

Reading the LIBOR Index

• 1

  Open your Internet browser and navigate to liborated.com.

• 2

  Find the appropriate time frame from the box holding the LIBOR rates (it appears to the left of the window screen); "1 M" for a one-month rate, "2 M" for a two-month rate and so on.

• 3

  Use the figure given next to the time scale as a percentage; for example, if the figure next to "2 M" given is 0.28906, the approximate inter-bank interest rate for a loan over two months would be 0.28906 percent. This would normally round up to 0.29 percent.