Bank-to-bank borrowing costs for sterling nudged up on Wednesday after minutes from the Bank of England suggested its quantitative easing programme has probably ended. The three-month sterling London interbank offered rate climbed for a ninth successive session, to 0.64188 percent - the highest since early September - from 0.64125 percent on Tuesday.
-- BoE minutes disappoint some hoping for more QE
The equivalent dollar and euro rates were also set a touch higher, although they were still within striking distance of record lows plumbed recently. All nine members of the BoE's Monetary Policy Committee voted this month not to expand the central bank's QE policy - dashing expectations that at least one might have called for more asset purchases.
"On balance it suggests the QE programme has probably come to an end and the market's focus now has started to shift to an eventual rate hike," said Nick Stamenkovic, strategist at RIA Capital Markets in Edinburgh. Market participants also awaited more insights into the US Federal Reserve's exit strategy from ultra-loose monetary policy in minutes of the January policy meeting due at 1900 GMT.
Patrick Jacq, strategist at BNP Paribas in Paris, said that while major central banks were preparing to withdraw extraordinary measures used to fight the financial crisis, big changes in liquidity policies in the near term were unlikely. This meant the overnight Eonia rate would only slowly climb towards the European Central Bank's 1.0 percent refi rate from the last reading of 0.32 percent.
Meanwhile, the amount of money borrowed under the ECB's overnight loan facility fell to 3.488 billion euros from 3.828 billion euros the previous day. Traders said the recent increase in the use of the ECB's marginal lending facility, from normally less than 100 million euros, has fuelled speculation about who needs the money.
They say this will be a cause for concern if the borrowing remains elevated on Thursday, when proceeds of this week's seven-day tender will have reached banks. In the Greek repo market, analysts said there had been no further deterioration.
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