Euribor rates unchanged as ECB seen on hold

Tue Nov 6, 2012 5:24am EST

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FRANKFURT, Nov 6 (Reuters) - Key Euribor bank-to-bank
lending rates remained unchanged on Tuesday, finding further
support as a year-long downtrend levels out ahead of the
European Central Bank's rate decision on Thursday.
    Bank-to-bank lending rates have fallen sharply since last
November when ECB plans emerged to flood the banking system with
ultra-cheap, three-year cash. The ECB has also cut interest
rates to a record low of 0.75 percent and is expected to hold
rates unchanged its next policy meeting on Thursday.
    A Reuters poll gave an 80 percent chance the ECB will hold
its main refinancing rate, though most of the 73 analysts polled
expected it will cut to a new record low of 0.5 percent within
the next few months. 
    Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, stayed at 0.196
percent. The rate fell on Monday but was unchanged during the
previous two sessions. 
    The six-month rate eased to 0.377 percent from 0.381 percent
on Tuesday. The one-week rate edged up to 0.079
percent from 0.078 percent, while the overnight Eonia rate
 eased to 0.089 percent from 0.090 percent.
    Dollar-priced bank-to-bank Euribor lending rates 
  rose, with three-month rates up at
0.58462 percent from 0.58077 percent. Overnight rates inched up
to 0.30923 percent from 0.30846 percent.
    The bank's decision in July to stop paying interest on
overnight deposits paved the way for further declines by
removing the 0.25 percent floor for the money market.
    The amount of excess cash in the euro zone banking system is
extremely high at about 676 billion euros, according to Reuters
calculations.
    With that figure set to remain high for the foreseeable
future, money market experts have focused on whether the ECB
could copy Denmark's example and start charging banks to deposit
cash overnight. 
    Policymakers showed initial interest in the idea but some
have since expressed reservations. Governing Council member
Ewald Nowotny said last month a negative deposit rate was not
realistic.  
    
    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 Jeremy Gaunt)
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