Key euro-priced bank-to-bank lending rates fell for the 11th session running on Monday, hitting a new five-month low as this month's surprise ECB interest rate cut and excess liquidity continued to exert downward pressure on the money market. Interbank market rates have fallen sharply since the European Central Bank cut rates by 25 basis points to 1.25 percent this month as it warned the eurozone could slide into a mild recession by the end of the year.
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 anew on Monday, to 1.459 percent from 1.462 percent and the lowest since June. Six-month Euribor eased to 1.685 percent from 1.688 percent while 12-month rates eased to 2.026 percent from 2.032 percent.
Shorter-term rates fell further below 1 percent. One-week rates fell to 0.921 percent from 0.926 percent after overnight rates fell to 0.733 percent from 0.736 percent. The ECB has reinstated some of its most potent crisis-fighting tools in recent months, including one-year liquidity injections, although the moves have done little to kick-start interbank lending. ECB liquidity is expected to keep the euro money market heavily oversupplied for the foreseeable future and maintain downward pressure on interbank rates.