Key Euribor rate steady as ECB strengthens readiness to act

Fri Jan 10, 2014 5:17am EST

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FRANKFURT, Jan 10 (Reuters) - The key euro-priced
bank-to-bank lending rate held steady on Friday after a firm
message from the European Central Bank that it would act if the
rise in short-term rates became unwarranted.
    The ECB kept its policy unchanged at the January policy
meeting and laid down two triggers for further action, saying it
would try to fight further falls in inflation or an unwarranted
rise in money market rates. 
    The rates have started to rise again after excess liquidity
, or money banks have beyond what they need for
their day-by-day operations, almost halved earlier in the week. 
    It stood at 156 billion euros on Friday, slightly lower than
the previous day and is expected to fall further once banks
resume their early repayments of the ECB's three-year crisis
loans next week. 
    A drop in excess 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 Friday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
remained unchanged at 0.282 percent.
    The six-month Euribor rate ticked up to 0.390
percent from 0.388 percent and the shorter-term one-week rate
 rose to 0.175 percent from 0.173 percent.
    Overnight Eonia rose to 0.156 percent on Thursday
from 0.137 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)
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