August 29, 2013 / 9:18 AM / 4 years ago

Key Euribor rate steady as policymakers vow to keep rates low

FRANKFURT, Aug 29 (Reuters) - The key Euribor bank-to-bank
lending rate held steady on Thursday after European Central Bank
policymakers vowed to keep interest rates low for some time as
the recovery sets in slowly. 
    ECB Governing Council member Ewald Nowotny said in a panel
discussion central banks were giving markets "a certain
security" by deploying forward guidance, saying they would keep
interest rates low for the foreseeable future. 
    ECB Executive Board member Joerg Asmussen confirmed the
ECB's forward guidance of keeping interest rates low or lower
for an extended period on Tuesday. 
    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
    German business sentiment surged to its highest level in 16
months in August, data from think-tank Ifo showed on Tuesday.
But ECB data on Wednesday showed that loans to the private
sector contracted at the fastest pace on record in July.
    The ECB holds its next policy meeting on Sept. 5.
    On Thursday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
stayed at 0.225 percent.
    The six-month Euribor rate rose to 0.345
percent from 0.344 percent and the one-week rate 
fell to 0.100 percent from 0.105 percent. The overnight Eonia
rate edged down to 0.078 percent from 0.080 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were firmer, with three-month rates
rising to 0.50833 percent from 0.50667 percent and one-week
rates up at 0.30833 percent from 0.30667 percent.
    Excess liquidity in the euro zone banking
sector stood at 240 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 
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 (Reporting by Frankfurt newsroom)
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