Euribor rates rise as monetary tightening expectations firm
FRANKFURT, April 1 |
FRANKFURT, April 1 (Reuters) - Key euro-priced bank-to-bank lending rates hit new 21-month highs on Friday, boosted by rising expectations the European Central Bank will raise interest rates next week.
Recent ECB policymaker comments have cemented expectations the bank will raise rates, which have been frozen at a record low 1 percent since May 2009, in April. Those expectations were reinforced by data on Thursday showing euro zone inflation unexpectedly rose in March. [ID:nLDE72U14W]
The three-month Euribor rate EURIBOR3MD= -- traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending -- rose to 1.249 percent from 1.239 percent, hitting the highest level since June 2009.
Six-month rates EURIBOR6MD= climbed to 1.556 percent from 1.546 percent while longer-term 12-month rates EURIBOR1YD= rose to 2.013 percent from 1.996 percent, marking the first time in two years it has topped 2 percent.
Shorter-term one-week rates EURIBORSWD= bucked the trend dropping to 0.777 percent from 0.792 percent.
EONIA overnight interest rates EONIA= jumped to 0.902 percent on Thursday from 0.590 percent the previous day.
Excess liquidity in the money market is around 27 billion euros, according to Reuters calculations.
Having taken 100 billion euros in the ECB's weekly handout of seven-day funding on Tuesday, around 11 billion more than last week, banks took 130 billion in three-month funding on Wednesday, well down on the 150 billion euros worth of equivalent expiring funding taken back in December.
The ECB threw a lifeline to Irish banks on Thursday, as Ireland released results of stress tests on the health of its banks, revealing they needed an extra 24 billion euros in capital. The central bank said it would no longer insist on minimum credit ratings for Irish sovereign debt, or for debt guaranteed by the Irish government, when accepting it as collateral in money market operations. [ID:nLDE72U1QQ]
The ECB left euro zone interest rates on hold at a record low 1 percent in March but flagged plans to raise them at its April meeting, which will be held next week, wrongfooting markets which had expected the first rate rise much later in the year.
The ECB also left all its liquidity operations at full allotment for at least another three months, putting its exit strategy from stimulus measures on hold for the second quarter running.
It is already back to its pre-crisis range of funding. Three-month loans are once again the longest maturity on offer and banks have now paid back all the six-month and 12-month loans the ECB injected during the turmoil. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphic of EONIA trading volumes click here
For graphic of euro zone liquidity levels click r.reuters.com/wer86p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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 EURIBOR=
* 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 EONIAINDEX
* For graphs of historic Euribor and EONIA swap rates, right click on the links in angle brackets below, and select 'Related Graph' 1 week EURIBORSWD= EONIAINDEXSW= 2 week EURIBOR2WD= EONIAINDEX2W= 3 week EURIBOR3WD= EONIAINDEX3W= 1 month EURIBOR1MD= EONIAINDEX1M= 2 month EURIBOR2MD= EONIAINDEX2M= 3 month EURIBOR3MD= EONIAINDEX3M= 4 month EURIBOR4MD= EONIAINDEX4M= 5 month EURIBOR5MD= EONIAINDEX5M= 6 month EURIBOR6MD= EONIAINDEX6M= 7 month EURIBOR7MD= EONIAINDEX7M= 8 month EURIBORS8M= EONIAINDEX8M= 9 month EURIBOR9MD= EONIAINDEX9M= 10 month EURIBOR10MD= EONIAINDEX10M= 11 month EURIBOR11MD= EONIAINDEX11M= 1 year EURIBOR1YD= EONIAINDEX1Y= (Reporting by Frankfurt newsroom; Editing by Susan Fenton)
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