Libor, the key London interest rate that determines many mortgage loan reset rates, dropped to below 0.50 percent for the first time.

The work by the central banks to end the two-year recession appears to have been positive, Bloomberg reported.

Libor dipped to 0.496 percent, from 0.502 percent on July 24, the British Bankers’ Association said, Bloomberg reported.

The rate is a benchmark for $360 trillion of financial products globally and reached a high of 4.82 percent on Oct. 10 after Lehman Brothers Holdings fell apart in September.

The rate decline is a positive sign, said Christoph Rieger, co- head of fixed-income strategy at Commerzbank AG in Frankfurt.

“I’m not saying the market has returned to normal, but my view is that the systemic risk we saw after the collapse of Lehman last autumn is perhaps gone. Rates should stay low in the foreseeable future,” he said.

However, Laurence Mutkin, a market strategist at Morgan Stanley, said banks are holding onto their cash, Dow Jones reported.

"With European banks depositing between EUR177.0 billion and EUR192.0 billion daily at the ECB Deposit Facility during the past week, it's clear euro area financial markets are not distributing cash to the interbank and non-financial markets as well as they might be," he said.

Libor rates are projected to increase again, based on current valuations from Eurodollar futures contracts, Dow Jones reported.