February 20, 2014 / 10:57 AM / 4 years ago

Key Euribor rate dips as survey shows business recovery eases

FRANKFURT, Feb 20 (Reuters) - The key euro-priced
bank-to-bank lending rate eased on Thursday as surveys showed an
expected acceleration in euro zone business activity failed to
materialise this month and firms cut prices again to drum up
    The Markit Composite Purchasing Managers' survey suggested
the euro zone inflation rate was not going up anytime soon - a
development that may further stoke fears of deflation in the
currency bloc. 
    Howard Archer, economist at IHS Global Insight, expected
that a combination of low euro zone inflation, weak growth, and
tight credit conditions would ultimately prompt the European
Central Bank to take fresh policy action.
    "Our current view is that the ECB will most likely take
measures aimed at adding liquidity," Archer said, adding that
this could involve the ECB suspending operations to soak up
money it spent buying bonds during the euro zone's debt crisis
under its now-terminated Securities Markets Programme.
    "It is also possible that the ECB could trim its refinancing
rate to 0.15 percent or even 0.10 percent, although this is not
our central forecast," he said in a research note.
    ECB Executive Board member Peter Praet said on Tuesday the
central bank would maintain accommodative monetary policy for as
long as needed, stressing "we really mean it".
    The three-month Euribor rate, considered the
main gauge of unsecured bank-to-bank lending, eased to 0.286
percent on Thursday from 0.287 percent.
    The six-month Euribor rate fell to 0.384
percent from 0.386 percent. The shorter-term one-week rate
 edged up to to 0.192 percent from 0.191 percent.
    Excess liquidity, or the amount of money banks
have beyond what they need for their day-to-day operations, fell
to 130 billion euros. The EONIA overnight lending rate
rose to 0.164 percent on Wednesday from 0.153 percent in the
previous session.
    In January, ECB President Mario Draghi said an unwarranted
increase in short-term-money market rates and a worsening of the
medium-term outlook for inflation could trigger more policy
    For a package of graphics on the ECB, click on:     
    For graphic of euro zone liquidity levels click:       
    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
    1 week       
    2 week       
    1 month      
    2 month      
    3 month      
    6 month      
    9 month      
    1 year       

 (Reporting by Frankfurt newsroom; Editing by Toby Chopra)
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