Euribor lending rates rose to near a two-year high

Wednesday, 13 April 2011 01:14

Euribor lending rates rose to near a two-year high yesterday mainly off the back of expectations that the European Central Bank will continue to increase euro zone interest rates this year. The three-month Euribor rate rose to 1.327 percent from 1.320 percent on Tuesday.

Six month rates rose to 1.626 percent from 1.621 percent, longer-term 12-month rates rose to 2.099 percent from 2.093 percent, while shorter-term one-week rates jumped to 1.145 percent from 1.130 percent.

Ongoing concerns of policy tightening and a reduction in excess money market liquidity have been the main drivers behind a 25 percent plus rise in bank-to-bank lending rates since the start of the year.

Excess liquidity in the money market is currently around 11 billion euros, banks increased their intake of ECB funding by around 10 billion euros on Tuesday, taking 83.7 billion in 1-month funding and 94 billion in weekly funding.