FRANKFURT: Euribor bank-to-bank lending rates rose on Wednesday after surveys suggested euro zone private industry returned to growth in July, easing pressure on the European Central Bank to further loosen monetary policy.
Markit's flash Eurozone Composite PMI, based on surveys of thousands of companies across the region and a reliable indicator of growth, jumped to an 18-month high of 50.4 in July from 48.7 in June.
The bounce back to growth supported the rise in interbank rates, which had already been trending higher since Bundesbank chief Jens Weidmann said on July 11 the ECB had not "tied itself to the mast" with its 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.
On Wednesday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, ticked up to 0.225 percent from 0.224 percent.
The six-month rate increased to 0.343 percent from 0.340 percent and the one-week rate inched up to 0.107 percent from 0.105 percent. The overnight Eonia rate rose to 0.105 percent from 0.101 percent.
Dollar-priced bank-to-bank Euribor lending rates were higher, with three-month rates rising to 0.48500 percent from 0.48167 percent and one-week rates to 0.30333 percent from 0.30000 percent.
Excess liquidity in the euro zone banking sector was at 237 billion euros, still high enough to keep market rates below the ECB's refinancing rate.
The ECB said in its monthly bulletin last Thursday 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".
The ECB's main refi rate is currently 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.
Comments
Comments are closed.