Excess liquidity pushes down Euribor rates

Key euro-priced bank-to-bank lending rates fell on Friday under the weight of heavy excess market liquidity and a growing belief the European Central Bank will keep interest rates on hold well into next year. The recent increase in euro zone financial market tensions has pushed banks to stock up on ECB funding. Excess liquidity in the euro money market rose to 142 billion euros according to Reuters calculations , way above normal levels.
The three-month Euribor rate - traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending - ticked down to 1.533 percent from 1.535 percent. Six-month Euribor rates edged down to 1.730 percent from 1.737 percent, while longer-term 12-month rates fell to 2.066 percent from 2.073.
Shorter-term one-week Euribor rates - most heavily influenced by excess liquidity - fell to 1.118 percent from 1.123 percent, further below the ECB's official 1.5 percent interest rate. Overnight rates rose to 0.883 percent from 0.876 percent.