Key Euribor rate rises ahead of ECB rate decision
FRANKFURT, Jan 9 (Reuters) - The key euro-priced bank-to-bank lending rate rose on Thursday after extra liquidity in the euro zone fell drastically and markets expected the European Central Bank to keep its policy unchanged later in the day. The ECB will announce its interest rate decision at 1245 GMT, followed by a news conference at 1330 GMT. Banks took 112.5 billion euros ($153 billion) in the ECB's main weekly refinancing operation - 56 billion euros less than the week before, when they stocked up for the tense end-of-the-year period. The ECB also successfully drained funds to offset the full value of government bonds it still holds from its now-ended bond-buying programme, after three consecutive failures. This caused excess liquidity - the amount of money in the market beyond what banks need for their day-to-day operations - to fall on Thursday to 157 billion euros from 280 billion euros the day before. A drop in liquidity is seen pushing up market rates as lenders rely less on central bank funding, with tension in money markets easing. But there is also a risk that if rates rise too quickly they may hold back the fragile recovery. On Thursday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, rose to 0.282 percent from 0.281 percent. The six-month Euribor rate ticked up to 0.388 percent from 0.383 percent, while the shorter-term one-week rate rose to 0.173 percent from 0.171 percent. Overnight Eonia rose to 0.137 percent on Wednesday from 0.099 percent the previous day. Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 1000 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' 1 week 2 week 1 month 2 month 3 month 6 month 9 month 1 year ($1 = 0.7353 euros) (Reporting by Eva Taylor; Editing by Paul Carrel)
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