The cost of borrowing longer-term U.S. dollars in the London interbank market fell Friday as term funding pressures eased marginally.

Data from the British Bankers’ Association showed three-month dollar Libor,
seen as a key gauge of the effectiveness of the Federal Reserve’s monetary
policy, moved down to 0.50188% from Thursday’s 0.50375%, matching Wednesday’s record low.

The three-month rate peaked at 4.81875% on Oct. 10.

Meanwhile, the overnight rate dropped to 0.22313% from Thursday’s 0.22938%, remaining below the upper end of the Federal Reserve’s Fed funds target range of zero-to-0.25%.

According to current valuations in eurodollar futures contracts, Libor rates
are expected to move higher.

The September eurodollar contract trades around 99.46, suggesting the BBA
three-month Libor rate will have risen to 0.54% by the contract expiry date,
September 15.