November 2, 2012 / 10:16 AM / in 5 years

Euribor rates hold steady for second day running

3 Min Read

FRANKFURT, Nov 2 (Reuters) - Key Euribor bank-to-bank
lending rates held steady for a second day running on Friday,
finding some support after a year-long downtrend as economists
expect the European Central Bank to hold interest rates next
week.
    A Reuters poll gave an 80 percent chance the ECB will hold
its main refinancing rate at 0.75 percent next Thursday, 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, were unchanged at
0.197 percent.
    The six-month rate eased to 0.385 percent from 0.387
percent. The one-week rate was unchanged at 0.079
percent and the overnight Eonia rate edged up to 0.079
percent from 0.078 percent.
    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 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.
    Dollar-priced bank-to-bank Euribor lending rates
  eased, with three-month rates falling
to 0.57917 percent from 0.58083 percent. Overnight rates fell to
0.31417 percent from 0.31500 percent.
    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 John Stonestreet)

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