Bank Lending Costs Exceeding ECB Rate Adds to Pressure on Draghi
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The cost of overnight unsecured lending in the interbank market exceeded the European Central Bank’s refinancing rate for a fourth day, boosting speculation the institution will reduce borrowing costs in 2014.
The euro overnight index average, or Eonia, was at 0.351 percent yesterday compared with the ECB’s 0.25 percent main refinancing rate. The four-day run above that level is the longest since 2011. Excess liquidity in the euro area, the surplus cash in the financial system that isn’t immediately needed by banks to meet their obligations, was at 125.5 billion euros ($170 billion), the least since December 2011, according to data compiled by Bloomberg.