Three-month eurozone interbank lending rates rose on Thursday as markets continued betting on a scaling back of the European Central Bank's non-standard liquidity measures, but analysts said some rates could soon reverse. The three-month Euribor - the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending - fixed at 1.025 percent earlier on Thursday, a more than 15-month peak.
Euribor broke above 1.0 percent - the ECB's refi policy rate - on Tuesday, for the first time since July 2009. The equivalent euro London Interbank Offered Rate (Libor) fixed at 0.96250 percent on Thursday, its highest level since mid-July 2009. Analysts said the overnight Eonia rate could be fixed higher later on Thursday, possibly exceeding the June 2009 high of 0.878 percent, which it repeated on September 30, 2010 after a lower-than-forecast take-up of ECB loans by European financial institutions.
However, two barriers stand in the way of overnight Eonia rates reaching the ECB's policy rate of 1.0 percent, say market observers. One is the level of liquidity left in markets after the looming three-month ECB money tender on October 27 and the other is the relationship between Euribor and Eonia itself. In contrast to the eurozone, the key three-month dollar Libor remained steady at 0.28844 percent but looked set to dip further in days to come.
Comments
Comments are closed.