Key euro-priced bank-to-bank lending rates fell slightly on Friday, as the typically tense end-of-year deadlines approached for money markets. The three-month Euribor rate - traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending - fell to 1.028 percent from 1.029 percent the previous day.
Six-month rates fell to 1.257 percent from 1.259 percent and shorter-term one-week rates fell to 0.691 percent from 0.703 percent. The longer-term 12-month rates bucked the trend and increased to 1.530 percent from 1.528 percent. Overnight rates fell to 0.646 percent from 0.721 percent.
Bank-to-bank 3-month lending rates traditionally sit just above the European Central Bank's headline rate, but the ECB's tactic of lending out unlimited cash during the financial crisis had long kept them well below the benchmark rate. The 3-month Euribor rate broke above the European Central Bank's 1.0 percent benchmark rate for the first time in well over a year in October, marking a milestone for money markets and interbank rates are around 20 percent higher than in September.
The ECB said last week it would continue to provide unrestricted funding to money markets until at least mid-April. It also kept interest rates on hold at a record low of 1 percent as expected. Economists currently expect the bank to keep them there until the fourth quarter of next year.
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