February 3, 2014 / 10:33 AM / 4 years ago

Key Euribor rate falls as inflation drop puts heat on ECB

FRANKFURT, Feb 3 (Reuters) - The key euro-priced
bank-to-bank lending rate eased on Monday after a slowdown in
inflation fed expectations the European Central Bank may take
fresh policy action as soon as Thursday.
    Euro zone inflation eased to 0.7 percent last month, data
released on Friday showed, slipping far below the ECB's target
of just under 2 percent. The drop fuelled expectations the ECB
may act at its policy meeting on Thursday, or a month later.
    The three-month Euribor rate, traditionally
the main gauge of unsecured bank-to-bank lending, duly fell for
the fourth session running - dropping to 0.290 percent from
0.296 percent.
    The six-month Euribor rate eased to 0.387
percent from 0.396 percent and the shorter-term one-week rate
 dipped to 0.184 percent from 0.188 percent.
    The EONIA overnight lending rate bounced up to
0.228 percent from 0.155 percent. Banks use cash to balance
their books at the end of each month, often causing a temporary
spike in EONIA rates.
    Spikes in overnight lending rates earlier this year had put
pressure on the ECB to step in and curb the rise, which if it
happens too quickly could even derail the recovery.
    But the amount of money sloshing around the euro zone's
money markets is expected to remain at a high enough level in
the near term to keep short-term interest rates at current
    Excess liquidity stood at 168 billion euros. 
    Euribor rates are fixed daily by the Banking Federation of 
the European Union (FBE) shortly after 1000 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
    1 week       
    2 week       
    1 month      
    2 month      
    3 month      
    6 month      
    9 month      
    1 year       
($1 = 0.7319 euros)

 (Reporting by Frankfurt newsroom)

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