Dollar Libor slides after Fed rate cut

LONDON, Jan 31 (Reuters) - The interbank cost of borrowing dollars fell sharply on Thursday, a day after the Federal Reserve delivered yet another hefty interest rate cut to try and prevent slowing growth from turning into recession.

As expected, the Fed lowered its key fed funds target rate half a percentage point to 3 percent on Wednesday, meaning it has slashed benchmark borrowing costs 225 basis points since September.

Three-month dollar Libor fell to 3.11188 percent from 3.23938 percent on Wednesday USD3MFSR= while one-month dollar rates fell to 3.14375 percent from 3.26375 percent USD1MFSR=, according to the British Bankers Association's daily fixing.

But the fall in euro and sterling Libor was much more modest.

Three-month euro Libor was fixed at 4.37750 percent from 4.38313 percent EUR3MFSR= on Wednesday and one-month euro Libor was fixed at 4.19250 percent compared with 4.19375 percent EUR1MFSR=.

Concerted central bank action and growing expectations of a European Central Bank rate cut had pushed euro Libor down over the past month but hopes for an imminent move from the ECB has receded on hawkish talk by policymakers and elevated inflation levels.

Three-month sterling rates fell a point to 5.58 percent GBP3MFSR= and one-month rates were at 5.56750 percent GBP1MFSR= from 5.57250 percent.