tk – The LIBOR is an inter-bank rate. When banks are afraid of loaning to each other (i.e. they feel there is some risk the other bank will default on the loan), they must demand higher interest rates to make up for the higher risk.
The Fed rate is not a market-based rate. The Fed sets it.
The LIBOR is more of a market-based rate and is based on banks perceived risk of loaning to each other.
