FRANKFURT, Nov 5 (Reuters) - The key euro-priced
bank-to-bank lending rate remained unchanged on Tuesday as
markets look forward to the European Central Bank's meeting on
Last week's news of a shock slowdown in inflation to 0.7
percent year-on-year in October - the lowest reading since
November 2009 - increased pressure on the bank to take fresh
policy action to support the euro zone recovery.
Also, the relatively strong euro foreign exchange rate has
worried some politicians who say it could crimp the nascent
Still, almost all money-market traders in a Reuters poll
said they expected the central bank to refrain from cutting
rates this month.
On Tuesday, three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
remained at 0.227 percent.
The one-week rate ticked down to 0.102 percent
from 0.103 percent and the six-month Euribor rate
decreased to 0.341 percent from 0.342 percent. The overnight
Eonia rate remained at 0.092 percent.
Excess liquidity - the amount of money in the
market beyond what the banking system needs to function - in the
euro zone rose to 189 billion euros, but is still relatively
close to a 2-year low.
Short-term money market rates are expected to rise closer to
the ECB's main refinancing rate, currently at 0.5 percent, once
excess liquidity falls below a threshold estimated to be in the
range of 100 billion to 200 billion euros.
The ECB said last month it was ready to cut interest rates
further or pump more cash into the system if it thought rises in
the interest rates banks charge each other to borrow were
ECB Governing Council member Ewald Nowotny said last
Thursday the ECB would provide more liquidity by the time its
batch of long-term refinancing operation (LTROs) expires in
Euribor rates are fixed daily by the Banking Federation of
the European Union (FBE) shortly after 0900 GMT.
* For a table of the latest Euribor fixings for terms of one
week to one year, double click on
* For a table of the previous day's fixings of EONIA swap
rates, which show market expectations for future overnight
lending rates, double click on
* For graphs of historic Euribor and EONIA swap rates, right
click on the links in angle brackets below, and select 'Related
(Reporting by Frankfurt newsroom)
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