FRANKFURT, Dec 3 Key Euribor bank-to-bank
lending rates eased slightly on Monday, feeling out support
levels after a year-long downtrend under the weight of excess
liquidity in money markets.
Bank-to-bank lending rates have fallen sharply since
November last year when ECB plans emerged to flood the banking
system with ultra-cheap, three-year cash.
But the impact of the excess liquidity has now been largely
priced in and there is uncertainty about whether the ECB will
cut interest official rates further, helping market rates find
Only a handful of the 71 economists polled by Reuters last
week said the ECB will trim its main rate from 0.75 percent to
0.5 percent on Thursday. They were split down middle over the
possibility of a rate cut early next year.
Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, dipped a fraction
on Monday to 0.190 percent from 0.191 percent, giving up some
gains made at the end of last week.
The six-month rate eased to 0.342 percent from 0.344 percent
and the one-week rate slipped to 0.076 percent
from 0.077 percent. The overnight Eonia rate rose to
0.077 percent from 0.072 percent.
Dollar-priced bank-to-bank Euribor lending rates
were lower, with three-month rates
falling to 0.57615 percent from 0.58154 percent and one-week
rates dropping to 0.34769 percent from 0.35077 percent.
The ECB's decision in July to stop paying interest on
overnight deposits paved the way for further declines in
euro-denominated rates by removing the 0.25 percent floor for
the money market.
The amount of excess cash in the euro zone banking system is
still extremely high at 621 billion euros, according to Reuters
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
Policymakers showed initial interest in the idea but some
have since expressed reservations. Asked about the idea last
month, Draghi said: "We haven't discussed (that)."
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
($1 = 0.7867 euros)
(Reporting by Frankfurt newsroom; Editing by Catherine Evans)