July 16, 2013 / 9:32 AM / 7 years ago

Euribor rates steady as markets assess ECB guidance

FRANKFURT, July 16 (Reuters) - Euribor bank-to-bank lending
rates were unchanged on Tuesday, steadying after key European
Central Bank policymakers qualified the bank's use of forward
guidance on low interest rates.
    Abandoning its traditional policy of never pre-committing on
future rates, the ECB said on July 4 it would keep its interest
rates at present or lower levels for an "extended period" - its
first use of so-called forward guidance.
    But last week Bundesbank chief Jens Weidmann said the ECB
had not "tied itself to the mast" with the vow. 
Another ECB policymaker, Benoit Coeure, said the bank would
decide each and every month whether the pledge was still valid.
    On Tuesday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
was unchanged at 0.219 percent.
    The six-month rate was steady at 0.332 percent
and the one-week rate was also unchanged, at 0.097
percent. The overnight Eonia rate dipped to 0.086
percent from 0.087 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were mixed, with three-month rates
rising to 0.47000 percent from 0.46857 percent and one-week
rates dipping to 0.29286 percent from 0.29429 percent.
    Excess liquidity in the euro zone banking
sector is at 262 billion euros, still high enough to keep market
rates below the ECB's refinancing rate.
    ECB President Mario Draghi said in February that he did not
expect market rates to face upward pressure until excess
liquidity in the banking sector fell below 200 billion euros.
    But the ECB said in its monthly bulletin last Thursday: "If
excess liquidity remains above a certain threshold, estimated to
be in the range of 100 billion to 200 billion euros, short-term
money market rates are expected to stay slightly above the
deposit rate." 
    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 
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 (Reporting by Frankfurt newsroom, editing by Gareth Jones)
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