FRANKFURT, May 2 Key euro zone bank-to-bank
lending rates hit fresh 23-month lows on Wednesday, 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
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 Wednesday, hitting 0.704 percent from 0.708 percent -
the lowest since June 2010.
Six-month rates fell further below 1 percent
to 0.992 percent from 0.998 percent and 12-month rates
dropped to 1.303 percent from 1.311 percent.
Shorter-term one-week rates continued to bump around
all-time lows. The rate inched down to 0.316
percent from 0.317 percent. Overnight rates fell to
0.344 percent from to 0.346 percent.
Dollar-priced bank-to-bank Euribor lending rates
were mixed. Three-month rates fell to
0.916 percent from 0.920 percent while overnight rates
rose to 0.321 percent from 0.318 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, where
banks parked 789 billion euros. In normal times the amounts are
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
(Reporting by Frankfurt newsroom; editing by Patrick Graham)