Wednesday July 8, 10:34 AM
Three-month Euribor closes on main ECB interest rate
FRANKFURT, July 8 (Reuters) - Three-month euro-zone
bank-to-bank lending rates hit fresh record lows on Wednesday,
closing on the European Central Bank's benchmark 1 percent
policy rate.
Interbank rates have hit new lows recently
as an injection
of almost half a trillion euros into money markets by the
European Central Bank continues to reduce borrowing costs.
The three-month Euribor rate, traditionally
the main gauge of interbank euro lending and a mix of interest
rate expectations and banks' appetite for lending, fell to an
all-time low of 1.029 percent, surpassing Tuesday's previous
record low of 1.044 percent.
The pattern was the same across the board. The
shorter-term one-week rate remained well under the
ECB's headline interest rate of 1.0 percent, falling to 0.425
percent from 0.434 percent. The six-month rate
dropped to a new low of 1.249 percent from 1.261 percent.
The ECB's tactic of cutting interest rates at a record pace
and pouring hundreds of billions of euros into money markets has
helped to push Euribor levels down more than 4 percentage points
since the collapse of Lehman Brothers (NYSE: LEH - news) spiked the three-month
rate to an all-time high in October.
Overnight interest rates have plunged anew in response to a
recent record ECB injection of 442 billion euros of ultra cheap
1-year funds.
EONIA fixed at 0.476 percent on Tuesday and
overnight cash was quoted at a bid/ask spread of 0.20/0.40
percent at 0912 GMT, according to Reuters data --
close to the ECB's 0.25 percent overnight deposit rate.
The ECB kept its main policy rate at 1.0 percent last week.
Analysts expect its easing cycle has come to an end and that
rates will stay at their current low into the fourth quarter of
2010. (For story, double click on, for poll )
Euribor rates are fixed daily by the Banking Federation of
the European Union (FBE) shortly after 0900 GMT.
Three-month rates form a benchmark for much short-term
commercial lending in Europe, and one-week rates give an
indication of banks' very short term financing conditions.
* 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'
1 week
2 week
3 week
1 month
2 month
3 month
4 month
5 month
6 month
7 month
8 month
9 month
10 month
11 month
1 year
(Reporting by Frankfurt newsroom; Editing by Victoria Main)
Keywords: MARKETS EURIBOR
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