FRANKFURT, Dec 5 Key Euribor bank-to-bank
lending rates ticked down on Wednesday, a day before the
European Central Bank's policy meeting, slowly finding a floor
after a year-long downtrend.
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 official interest rates further, helping market rates find
Only a handful of the 71 economists polled by Reuters last
week said the ECB would 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, fell to 0.190
percent from 0.191 percent, having hovered around this level in
The six-month rate eased to 0.340 percent from 0.341 percent
and the one-week rate remained unchanged at 0.077
percent. The overnight Eonia rate fell to 0.073 percent
from 0.077 percent.
Dollar-priced bank-to-bank Euribor lending rates
also fell, with three-month rates
dropping to 0.57077 percent from 0.57462 percent and one-week
rates down at 0.34769 percent from 0.35000 percent in the
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 630 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)