FRANKFURT: Bank-to-bank lending rates hit new all-time lows on Tuesday as weak monetary data fuelled expectations the European Central Bank may cut interest rates as soon as next month to help combat the euro zone crisis.
The reduction in Euribor rates extended a fall in interbank rates that began late last year when the ECB flooded money markets with cheap longer-term loans.
Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, eased to 0.290 percent from 0.293 percent.
Six-month Euribor rates also fell, to 0.553 percent from 0.558 percent. Shorter-term one-week rates remained unchanged at 0.092 percent, while Eonia overnight rates ticked up to 0.110 percent from 0.107 percent.
Dollar-priced three-month bank-to-bank Euribor lending rates fell to 0.747 percent from 0.749 percent, while overnight dollar rates inched up to 0.310 percent from 0.309 percent.
The ECB's move to stop paying interest on banks' deposits has prompted banks to make stronger use of the current account facility, which still pays 0.75 percent interest for the required reserves.
A total of 333 billion euros was parked in the ECB's deposit facility overnight. Banks' current account deposits at the ECB dipped to 524 billion euros.
Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.
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