Key eurozone bank-to-bank lending rates fell to a new 21-month low on Friday as the ECB's injection of over 1 trillion euros into the euro zone's financial system over the past couple of months continued to exert downward pressure. The ECB gave euro area banks over 1 trillion euros in the form of 3-year loans in December and February to revive the interbank lending market. Since the first dose in December, Euribor rates have fallen by about 45 percent.
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 to 0.777 percent from 0.783 percent, the lowest level since the late June 2010. Rates in longer-term maturities also dropped. Six-month rates fell to 1.078 percent from 1.084 percent and 12-month rates dropped to 1.416 percent from 1.420 percent. The one-week rate, which continues to bump around all-time lows, dipped to 0.316 percent from 0.317 percent. Overnight rates fell to 0.349 percent on Thursday from 0.352 percent.
Despite the sharp fall in interbank rates over the last few months, the benchmark three-month rate remains above the euro-era low of 0.634 percent it hit in early 2010. Futures markets see further falls, however, on expectations the ECB will keep limit-free liquidity available for the foreseeable future.