BoE in £10bn money market U-turn

Previously, the Bank said it was not its job to lower three month rates but it has made the move to help banks struggling with the credit crunch. In recent weeks, the three-month Libor, the rate at which banks lend to each other, has risen not only above the Bank of England's base rate of 5.75%, but also higher than the emergency lending rate of 6.75%. This suggested that banks were reluctant to lend each other money because of the uncertainty in the market. Assets that banks are allowed to use as collateral will be wider than usual and will include their mortgage debt. The Bank of...