April 5, 2012 / 9:19 AM / 5 years ago

Euribor rates hit new 21-month lows after ECB meeting

FRANKFURT, April 5 (Reuters) - Key euro zone bank-to-bank
lending rates hit new 21-month lows on Thursday, pulled down by
the enormous torrent of cash the European Central Bank has
flooded financial markets with since late last year.	
    The ECB, which left official euro zone interest rates at 1
percent on Wednesday (click ), has poured over 1
trillion euros of ultra-cheap, 3-year funding into the banking
system since the end of December, a move which has sparked a 45
percent drop in the prices at which banks lend to each other.	
    Three-month Euribor rates, traditionally the
main gauge of unsecured interbank euro lending and a mix of
interest rate expectations and banks' appetite for lending,
continued to fall on Thursday, hitting 0.766 percent, the lowest
level since June 2010.	
    Six-month rates fell to 1.064 percent from
1.067 percent and 12-month rates dropped to 1.402
percent from 1.405 percent.	
    Shorter term rates bucked the trend. The one-week rate
, which continues to bump around all-time lows,
remained at 0.317 percent. Overnight rates rose to
0.353 percent from 0.343 percent.	
    Dollar-priced bank-to-bank Euribor lending rates increased
. 3-month rates rose to 0.961 percent
from 0.957 percent, while overnight rates climbed to
0.326 percent from 0.322 percent.	
    Despite the sharp fall in interbank rates over the last few
months, the benchmark euro-priced three-month rate remains some
way above the euro-era low of 0.634 percent hit in early 2010. 	
    With the ECB expected keep limit-free liquidity available
and interest rates at their record low for the foreseeable
future, further falls in Euribor rates are expected, but part of
the reason for the higher rates is that lending markets remain
impaired.	
    High excess liquidity in the banking system has led to high
use of the ECB's overnight deposit facility. Banks parked 773
billion euros there on Wednesday. In normal times the amounts
are minimal.	
    The 0.25 percent the ECB offers banks for overnight deposits
continues to act as a floor for money market rates as banks know
they can get that level of interest no matter what.	
    	
    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 
Graph'  	
    1 week       	
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    8 month      	
    9 month      	
    10 month    	
    11 month    	
    1 year       	
	
 (Reporting by Frankfurt newsroom)

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