August 27, 2013 / 9:22 AM / 4 years ago

Key Euribor rate steady as ECB at odds over rate path

FRANKFURT, Aug 27 (Reuters) - The key Euribor bank-to-bank
lending rate held steady for the second day running on Tuesday
after European Central Bank policymakers offered mixed views on
the prospect of further interest rate cuts.
    The euro zone economy emerged from recession in the second
quarter and a survey last week showed business activity across
the euro zone picked up this month at a faster pace than
expected. 
    German business sentiment surged to its highest level in 16
months in August, data from think-tank Ifo showed on Tuesday.
 
    ECB policymaker Ewald Nowotny said last week he saw no
reason at the moment to cut rates. Bundesbank President Jens
Weidmann said in a newspaper interview released on Sunday he saw
no change in the ECB's monetary policy stance. 
    But Cypriot central bank governor Panicos Demetriades told
Bloomberg that a rate cut was still "on the cards", but added
that the most recent data was "more encouraging".
    The ECB holds its next policy meeting on Sept. 5.
    On Tuesday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
was unchanged at 0.225 percent.
    The six-month Euribor rate was also steady at
0.345 percent and the one-week rate was unchanged
at 0.106 percent. The overnight Eonia rate edged up to
0.078 percent from 0.077 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were mixed, with three-month rates
rising to 0.50833 percent from 0.50667 percent and one-week
rates unchanged at 0.30833 percent.
    Excess liquidity in the euro zone banking
sector stood at 244 billion euros, still high enough to keep
short-term market rates below the ECB's refinancing rate.
    The ECB said in its July monthly bulletin that as long as
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".
    A Reuters poll of traders showed last week they did not
expect euro zone money market rates to rise significantly even
if excess liquidity drops below the 200 billion euro level.
 
    The ECB's main refi rate is at 0.5 percent and the deposit
rate at zero.
    
    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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