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Euribor rates fall ahead of ECB meeting
November 8, 2012 / 10:18 AM / 5 years ago

Euribor rates fall ahead of ECB meeting

FRANKFURT, Nov 8 (Reuters) - Key Euribor bank-to-bank
lending rates ticked down on Thursday ahead of the European
Central Bank's interest rate decision and a day after the bank's
head painted a gloomy picture of the euro zone economy,
increasing expectations of a cut in coming months.
    Bank-to-bank lending rates have fallen sharply since last
November when ECB plans emerged to flood the banking system with
ultra-cheap, three-year cash. The ECB has also cut interest
rates to a record low of 0.75 percent but is expected to leave
them unchanged at Thursday's meeting. 
    The ECB rate decision announcement is due at 1245 GMT.
    A Reuters poll gave an 80 percent chance the ECB will hold
its main refinancing rate, though most of the 73 analysts polled
expected it will cut to a new record low of 0.5 percent within
the next few months. 
    Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, decreased to 0.194
percent from 0.196 percent. 
    The six-month rate fell to 0.370 percent from 0.375 percent
on Wednesday. The one-week rate was unchanged at
0.079 percent and the overnight Eonia rate remained at
0.090 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were mixed, with three-month rates
rising to 0.58308 percent from 0.58231 percent and overnight
rates falling to 0.30385 percent from 0.30769 percent.
    The bank's decision in July to stop paying interest on
overnight deposits paved the way for further declines by
removing the 0.25 percent floor for the money market.
    The amount of excess cash in the euro zone banking system is
extremely high at about 672 billion euros, according to Reuters
calculations.
    With that figure set to remain high for the foreseeable
future, money market experts have focused on whether the ECB
could copy Denmark's example and start charging banks to deposit
cash overnight. 
    Policymakers showed initial interest in the idea but some
have since expressed reservations. Governing Council member
Ewald Nowotny said last month a negative deposit rate was not
realistic.  
    
    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 Jeremy Gaunt)

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