Euribor rates plumb new lows on ECB rate cut hopes

Bank-to-bank lending rates sank to new all-time lows on Friday on expectations the European Central Bank will cut its interest rates as soon as next month, extending a downtrend that began with the ECB flooding markets with liquidity late last year.
ECB President Mario Draghi said the bank's policymakers discussed the possibility of cutting rates at their meeting on August 2 "but the Governing Council in its entirety decided this was not the time". A Reuters poll of economists conducted immediately after the meeting pointed to a cut in the ECB's main refinancing rate to 0.5 percent in September from 0.75 percent, which is already a record low.
The ECB's overnight deposit rate, which it cut to zero on July 5, acts as a floor for money market rates as banks only lend to rival banks if they are able to earn a better rate of interest than at the central bank. Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, eased to 0.334 percent from 0.339 percent on Thursday.
Six-month Euribor rates also fell, to 0.607 percent from 0.613 percent and shorter-term one-week rates ticked down to 0.095 percent from 0.096 percent. Eonia overnight rates decreased to 0.111 percent from 0.112 percent. Dollar-priced three-month bank-to-bank Euribor lending rates fell to 0.769 percent from 0.771 percent, while overnight dollar rates rose to 0.316 percent from 0.314 percent.