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Key Euribor rate steady as ECB eyed for assessment of recovery

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(Globalpost/GlobalPost)

FRANKFURT (Reuters) - The key Euribor bank-to-bank lending rate remained steady on Wednesday as investors try to gauge the European Central Bank's assessment of the euro zone recovery.

Recent economic data has shown the euro zone economy is on the mend, but lending to households and companies, particularly in the periphery remains weak.

On Wednesday, a survey showed that euro zone businesses had their best month in over two years in August as orders increased for the first time since mid-2011.

The ECB Governing Council discussed cutting rates in July but decided against and instead said it would keep rates at record lows for an extended period. The Council holds its next policy meeting on Thursday.

Signs of economic recovery have reduced pressure for a cut since the policymakers last met, though their forward guidance has failed to bring down market rates.

On Wednesday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, was unchanged at 0.225 percent.

The six-month Euribor rate edged up to 0.343 percent from 0.342 percent while the one-week rate remained at 0.097 percent. On Tuesday, the overnight Eonia rate inched up to 0.080 percent from 0.079 percent.

Excess liquidity in the euro zone banking sector stood at 254 billion euros, still high enough to keep short-term market rates below the ECB's refinancing rate.

The ECB said in its July monthly bulletin that as long as excess liquidity "remains above a certain threshold, estimated to be in the range of 100 billion to 200 billion euros, short-term money market rates are expected to stay slightly above the deposit rate".

A Reuters poll of euro traders showed on Monday they did not expect any new steps from the ECB to prevent money market rates from rising closer to the refinancing rate, currently at 0.5 percent.

(Reporting by Frankfurt newsroom)

http://www.globalpost.com/dispatch/news/thomson-reuters/130904/key-euribor-rate-steady-ecb-eyed-assessment-recovery