September 17, 2012 / 9:18 AM / 5 years ago

ECB rate cut hopes push Euribor rates lower

FRANKFURT, Sept 17 (Reuters) - Euribor bank-to-bank lending
rates hit new all-time lows on Monday as expectations persisted
that the European Central Bank will cut interest rates further
in the coming months after it downgraded its economic outlook
for the euro zone. 
    The ECB kept its main refinancing interest rate at a record
low of 0.75 percent at its September policy meeting, but said
the euro zone economy would probably contract more than it had
previously expected this year. 
    Estonia's central bank governor Ardo Hansson told MNI News
at the weekend that interest rates were appropriate at the
moment and that all options were open with regards to a possible
rate change in October. 
    Euribor rates have fallen significantly since the late last
year when the ECB started flooding money markets with cheap
long-term loans. The fall continued on Monday.
    Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, fell to 0.248
percent from 0.250 percent.
    Six-month Euribor rates also fell, to 0.482
percent from 0.487 percent. Shorter-term one-week rates
 remained unchanged at 0.086 percent while Eonia
overnight rates dropped below the 0.100-percent mark
for the first time, to 0.095 percent from 0.103 percent.
    Dollar-priced three-month bank-to-bank Euribor lending rates
  fell to 0.597 percent from 0.601
percent, while overnight dollar rates stayed at 0.301 percent.
    The ECB's move to stop paying interest on banks' deposits
has prompted banks to make stronger use of the current account
facility, which still pays 0.75 percent interest for the
required reserves.
     A total of 335 billion euros was parked in the ECB's
deposit facility overnight. Banks' current account deposits at
the ECB dipped to 526 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)

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