FRANKFURT: Key euro zone bank-to-bank lending rates reached new 22-month lows on Tuesday, weighed down by the record amount of cash the European Central Bank has pumped into financial markets since late last year.
The ECB, which left official euro zone interest rates at 1.0 percent earlier this month (click), has poured over 1 trillion euros of ultra-cheap, 3-year funding into the banking system since the end of December, driving interbank rates to half of what they were last August.
Three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, fell further on Tuesday, hitting 0.727 percent compared to 0.731 percent on Monday - the lowest since mid-June 2010.
Six-month rates fell to 1.024 percent from 1.027 percent and 12-month rates dropped to 1.342 percent from 1.348 percent.
Shorter term rates also inched lower. The one-week rate , which continues to bump around all-time lows, eased to 0.318 percent from 0.319 percent, while overnight rates fell to 0.338 percent from 0.344 percent.
Dollar-priced bank-to-bank Euribor lending rates followed the broader downward trend. Three-month rates fell to 0.936 percent from 0.947 percent, though overnight rates inched up to 0.321 percent from 0.318 percent.
Despite the sharp fall in interbank rates over the last few months, the benchmark euro-priced three-month rate remains some way above the euro-era low of 0.634 percent hit in early 2010.
The 0.25 percent the ECB offers banks for overnight deposits continues to act as a floor for money market rates as banks know they can get that level of interest no matter what.
With the ECB expected to keep limit-free liquidity available and interest rates at their record low for the foreseeable future, further falls in Euribor rates are expected.
High excess liquidity in the banking system has led to high use of the ECB's overnight deposit facility. Banks parked 768 billion euros there on Tuesday. In normal times the amounts are minimal.
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 Graph'
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