Euribor inter-bank lending rates rose to a new high Friday, despite central banks provision of emergency liquidity to unfreeze credit markets following the financial turmoil in the US this week. The key Euribor 3-month rate, which is a benchmark for short-term commercial lending in Europe, rose to 5.005%. However, the US dollar Libor inter-bank rates fell towards the Fed's 2% benchmark rate.
The 3-month rate was 4.147% on June 14, 2007, the day after the ECB hiked its benchmark rate to 4%. Today's Euribor rate is just over the equivalent of 3 typical ECB rate hikes and is the highest in almost 8 years.
Six-month rates hit a fresh all-time high of 5.235% and the 1-week rate is 4.546%. This rate signals short term financing conditions to banks.
Euribor (Euro interbank offered rate) rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT. and the one-week rate compares to the European Central Bank's main refinancing rate of 4.25 percent.
Euribor Rates
The cost of borrowing dollars overnight fell back toward the Federal Reserve's 2% federal funds target, compared with Thursday's Libor (London interbank offered rate) fixing of 3.844%, and three-month borrowing costs also fell.
The Bank of England offered $40-billion to banks but only half of it was taken up, although that was slightly higher than the take-up of Thursday's offering.
The European Central Bank offered up another $40-billion. Results of that auction are due later Friday morning.
