A key short-term borrowing cost for banks and Wall Street rose to its highest level in 1-1/2 weeks as investors pared lending ahead of the U.S. Thanksgiving holiday.

The overnight interest rate in the repurchase agreement market was last quoted at 0.16 percent to 0.20 percent, compared with 0.16 percent late on Tuesday, according to ICAP.

In this $5 trillion sector, banks and bond dealers secure short-term loans from money market funds and other investors by using Treasuries and other securities as collateral.

U.S. financial markets will close on Thursday.

Meanwhile, what banks charge each other for three-month dollars rose further on expectations that the U.S. Federal Reserve will raise interest rates at its Dec. 15-16 policy meeting.

The London interbank offered rate on three-month dollars climbed to 0.4067 percent, up from 0.4023 percent on Tuesday. Wednesday's fixing was the highest since September 2012.

Libor is a rate benchmark for $350 trillion worth of financial products worldwide.