Interest Rate | featured news

U.S. prosecutors and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rate-rigging scandal.

It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork. The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis.

Central bankers and regulators will hold talks in September on whether the troubled global Libor interest rate can be reformed or whether it is so damaged that the benchmark of borrowing costs should be scrapped.

The prospect of criminal cases related to the Libor scandal is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities.

Barclays alerted U.S. regulators as far back as 2007 to concerns that banks were rigging benchmark interest rates, according to documents released on Friday, but policymakers on both sides of the Atlantic did not appear to take decisive action, underscoring the chaos of the financial crisis.

The Bank of England confirmed on Friday it had received U.S. recommendations to overhaul the Libor benchmark at the heart of a global rate-rigging scandal, saying it had passed them on to the banking group responsible for the rate... The Bank of England confirmed on Friday it had received U.S. recommendations to overhaul the Libor benchmark at the heart of a global rate-rigging scandal, saying it had passed them on to the banking group responsible for the rate.

China's second surprise rate cut and lending reform in the space of a month shows that Beijing wants borrowing to play a greater role in reviving an economy struggling with its weakest pace of growth since the global financial crisis.

Investors appeared unimpressed Wednesday with the Federal Reserve's latest step to help the economy, an extension of a program to lower long-term interest rates. Stocks were little changed for the day, and the yields on Treasury bonds were trading about where they were before the Fed's announcement.

India's industrial output was flat in April, deepening worries of an economic slowdown in Asia's third-largest economy and upping the pressure on the central bank to cut interest rates next week.

China delivered a surprise interest rate cut on Thursday to combat faltering growth, underlining concern among policymakers worldwide that the euro area's deepening crisis is threatening the health of the global economy.