ECB cash glut pushes Euribor rates to 9-1/2 month lows

Key euro zone bank-to-bank lending rates fell to new 9-month lows on Friday, as the European Central Bank's recent injection of almost half a trillion euros of 3-year liquidity and expectations for further rate cuts continued to pull down rates. The ECB kept interest rates at 1.0 percent on Thursday, but indicated to markets that rates could go lower should recent signs of stabilisation in the euro zone economy give way to substantial downside risks stemming from the debt crisis.
For now, the ECB is assessing how its recently implemented crisis-fighting measures take hold. The first of its two planned 3-year loans - which saw a take-up of 489 billion euros - has already improved banks' funding conditions, the ECB said. This is also reflected in lower interbank lending rates, which have fallen to 9-1/2 month lows in recent weeks.
On Friday, 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 1.231 percent from 1.245 percent the previous day, the lowest level since the end of March last year. Longer-term rates also dropped. Six-month rates fell to 1.514 percent from 1.527 percent, while 12-month rates fell to 1.842 percent from 1.856 percent.