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Key Euribor rate falls as pressure piles on ECB to act
February 4, 2014 / 10:22 AM / 4 years ago

Key Euribor rate falls as pressure piles on ECB to act

FRANKFURT, Feb 4 (Reuters) - The key euro-priced
bank-to-bank lending rate eased on Tuesday after a slowdown in
inflation fed expectations the European Central Bank may take
fresh policy action as soon as Thursday.
    Euro zone inflation eased to 0.7 percent last month, data
released on Friday showed, slipping far below the ECB's target
of just under 2 percent. The drop fuelled expectations the ECB
may act at its policy meeting on Thursday, or a month later.
 
    A minority of analysts expect it to cut the main refi rate,
currently at 0.25 percent, but it could also choose to take a
smaller step, such as ending bond-buy sterilisations, which
would add about 175 billion euros in liquidity to markets. 
    The three-month Euribor rate, traditionally
the main gauge of unsecured bank-to-bank lending, fell for the
fifth session running to a 3-week low. It dropped to 0.288
percent from 0.290 percent.
    The six-month Euribor rate remained at 0.387
percent while the shorter-term one-week rate 
dipped to 0.182 percent from 0.184 percent.
    The EONIA overnight lending rate fell to 0.140
percent on Monday, sharply down from 0.228 percent on Friday,
when banks prepared for the end of the month.
    Spikes in overnight lending rates earlier this year had put
pressure on the ECB to step in and curb the rise, which if it
happens too quickly could even derail the recovery.
    But the amount of money sloshing around the euro zone's
money markets is expected to remain at a high enough level in
the near term to keep short-term interest rates at current
levels. 
    Excess liquidity stood at 186 billion euros. 
    
    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       

 (Reporting by Frankfurt newsroom)

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