September 13, 2012 / 9:20 AM / 5 years ago

Euribor rates slide further, ECB rate cut eyed

FRANKFURT, Sept 13 (Reuters) - Euribor bank-to-bank lending
rates hit new all-time lows on Thursday 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 last week, but said the euro zone economy
would probably contract more than it had previously expected
this year. 
    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 Thursday.
    Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, fell to 0.252
percent from 0.255 percent.
    Six-month Euribor rates also fell, to 0.493
percent from 0.496 percent. Shorter-term one-week rates
 edged down to 0.087 percent from 0.088 percent
while Eonia overnight rates ticked up to 0.101 percent
from 0.100 percent.
    Dollar-priced three-month bank-to-bank Euribor lending rates
  fell to 0.632 percent from 0.660
percent while overnight dollar rates remained at 0.305 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 Reuters poll showed on Monday that 21 out of 26
participating traders said the ECB would not cut its deposit
rate below zero this year, a move that would in effect charge
banks to park excess funds with the ECB. 
    A total of 315 billion euros was parked in the ECB's deposit
facility overnight. Banks' current account deposits at the ECB
rose to 551 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; Editing by Toby Chopra)

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