Euro Money Market to Get Little Stress Relief From ECB Rate Cuts
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Estimates of future interbank euro borrowing costs fell to a record after today’s European Central Bank rate cuts, heightening concerns that ultra-low returns will further dissuade banks from lending to their peers.
Three-month swaps linked to the euro overnight index average, or Eonia, fell to as low as 12.6 basis points after the ECB lowered its deposit rate by 25 basis points to zero percent. The measure of overnight unsecured lending transactions, the so-called Eonia-OIS swap, has fallen from 39 basis points at the start of the year.