FRANKFURT: Bank-to-bank lending rates fell to all-time lows on Wednesday on expectations the European Central Bank will cut its interest rates as soon as next month to help combat the euro zone crisis.
The fall extended a downtrend in interbank rates that began late last year when the ECB flooded money markets with cheap longer-term cash.
Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, eased to 0.310 percent from 0.318 percent on Tuesday.
Six-month Euribor rates also fell, to 0.582 percent from 0.591 percent. Shorter-term one-week rates ticked down to 0.092 percent from 0.094 percent. Eonia overnight rates fell to 0.103 percent from 0.109 percent.
Dollar-priced three-month bank-to-bank Euribor lending rates rose to 0.762 percent from 0.754 percent, while overnight dollar rates dipped to 0.315 percent from 0.316 percent.
The ECB's move to stop paying interest on banks' deposits has prompted them to make stronger use of the current account facility, which still pays 0.75 percent interest for the required reserves.
A total of 327 billion euros was parked in the ECB's deposit facility overnight. Banks' current account deposits at the ECB rose to 543 billion euros.
Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.
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