FRANKFURT: Euribor bank-to-bank lending rates were little changed on Monday, steadying after key European Central Bank policymakers qualified the bank's use of forward guidance on low interest rates.
Abandoning its traditional policy of never pre-committing on future rates, the ECB said on July 4 it would keep its interest rates at present or lower levels for an "extended period" - its first use of so-called forward guidance.
But on Thursday Bundesbank chief Jens Weidmann said the ECB had not "tied itself to the mast" with the vow. Another ECB policymaker, Benoit Coeure, said the bank will decide each and every month whether the pledge is still valid.
On Monday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, dipped to 0.219 percent from 0.220 percent after rising in the the previous sessions.
The six-month rate rose to 0.332 percent from 0.331 percent and the one-week rate was unchanged at 0.097 percent. The overnight Eonia rate fell to 0.087 percent from 0.090 percent.
Dollar-priced bank-to-bank Euribor lending rates were firmer, with three-month rates rising to 0.46857 percent from 0.46714 percent and one-week rates increasing to 0.29429 percent from 0.29286 percent.
Excess liquidity in the euro zone banking sector is at 265 billion euros, still high enough to keep market rates below the ECB's refinancing rate.
ECB President Mario Draghi said in February that he did not expect market rates to face upward pressure until excess liquidity in the banking sector fell below 200 billion euros.
But the ECB said in its monthly bulletin last Thursday: "If 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."
Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.
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