October 7, 2013 / 9:24 AM / 4 years ago

Key Euribor rate steady after mixed ECB messages

FRANKFURT, Oct 7 (Reuters) - The benchmark Euribor
bank-to-bank lending rate was unchanged on Monday after a week
of mixed signals from the European Central Bank on the chances
of it launching a new round of long-term loans soon.
    With excess liquidity in the banking system declining, many
economists expect the ECB to launch a new round of long-term
cheap loans to encourage banks to lend to the wider economy and
to keep money market interest rates under control.
    ECB President Mario Draghi said last Wednesday the ECB was
"particularly attentive" to any moves in market rates which
could threaten economic recovery or push inflation too low. He
stopped short of announcing any immediate action. 
    But Governing Council member Christian Noyer said after the
bank's meeting that it had no need for now to offer a new round
of ultra-cheap long-term loans because liquidity in the banking
system was abundant. 
    ECB Executive Board member Benoit Coeure added on Thursday
that central banks must be wary of offering liquidity on such
easy terms that it deters some euro zone banks from necessary
restructuring. 
    On Monday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
stayed at 0.225 percent.
    The six-month Euribor rate inched higher to
0.339 percent from 0.338 percent while the one-week rate
 remained at 0.099 percent. The overnight Eonia
rate rose to 0.084 percent from 0.079 percent.
    Excess liquidity in the euro zone banking
sector - the amount of money in the market over and above what
the banking system needs to function - was at 217 billion euros,
close to its lowest level since late 2011, before the ECB
flooded markets with more than 1 trillion euros of long-term
loans.
    Short-term money market rates are expected to rise closer to
the main refinancing rate, currently at 0.5 percent, once excess
liquidity in the system falls below a threshold estimated to be
in the range of 100 billion to 200 billion euros.  
    
    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'  
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 (Reporting by Frankfurt newsroom; editing by Patrick Graham)

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