ECB cash drives Euribor rates to 23-month lows

FRANKFURT, April 30 (Reuters) - Key euro zone bank-to-bank
lending rates fell to 23-month lows on Monday, weighed down by
the record amount of cash the European Central Bank has pumped
into financial markets since late last year.
The ECB, which is expected to keep official euro zone
interest rates at 1.0 percent at its monthly meeting on
Thursday, has poured over 1 trillion euros of ultra-cheap,
3-year funding into the banking system since the end of
December, driving interbank rates to half of what they were last
August.
Three-month Euribor rates, traditionally the
main gauge of unsecured interbank euro lending and a mix of
interest rate expectations and banks' appetite for lending, fell
further on Monday, hitting 0.708 percent from 0.715 percent -
the lowest since the end of May 2010.
Six-month rates dipped below 1 percent for the
first time in almost 2 years, falling to 0.998 percent from
1.007 percent and 12-month rates dropped to 1.311
percent from 1.321 percent.
Shorter-term one-week rates continued to bump around
all-time lows. The rate inched up to 0.317 percent
from 0.316 percent. Overnight rates edged higher to
0.346 percent from 0.343 percent.
Dollar-priced bank-to-bank Euribor lending rates
were mixed. Three-month rates fell to
0.920 percent from 0.929 percent while overnight rates
rose to 0.318 percent from 0.316 percent.
Despite the sharp fall in interbank rates over the last few
months, the benchmark euro-priced three-month rate remains some
way above the euro-era low of 0.634 percent hit in early 2010.
The 0.25 percent the ECB offers banks for overnight deposits
continues to act as a floor for money market rates as banks know
they can get that level of interest no matter what.
With the ECB expected to keep limit-free liquidity available
and interest rates at their record low for the foreseeable
future, further falls in Euribor rates are expected.
High excess liquidity in the banking system has
led to high use of the ECB's overnight deposit facility. Banks
parked 794 billion euros there over the weekend. In normal times
the amounts are minimal.

Euribor rates are fixed daily by the Banking Federation of
the European Union (FBE) shortly after 0900 GMT.
* For a table of the latest Euribor fixings for terms of one
week to one year, double click on
* For a table of the previous day's fixings of EONIA swap
rates, which show market expectations for future overnight
lending rates, double click on
* For graphs of historic Euribor and EONIA swap rates, right
click on the links in angle brackets below, and select 'Related
Graph'
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(Reporting by Frankfurt newsroom; editing by Patrick Graham)