WASHINGTON, July 19 (Reuters) - U.S. Federal Reserve Governor Randal Quarles on Thursday suggested the Fed could publish an interest rate benchmark that would promote stability and certainty about interest rates.
Quarles endorsed a new interest rate benchmark, the secured overnight financing rate (SOFR), as a rival to the existing index, LIBOR. Quarles went on to say the Fed could publish an average of SOFR to further build confidence in the index.
“I think it is appropriate for the Federal Reserve to consider publishing a compound average of SOFR that market participants could then use,” Quarles said in an address to the Alternative Reference Rates Committee Roundtable in New York.
“It has been suggested that we could call it SAFR, for secured average financing rate, and this is something that we are encouraging our staff to explore.”
The reputation of the London interbank offered rate (LIBOR) has been tarnished by scandals from trader manipulation. (Reporting By Patrick Rucker Editing by Chizu Nomiyama)