Euro-Area Money Market Rates Approach Zero as ECB Plan Permeates
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A gauge of overnight borrowing costs in euros fell to a record low as the European Central Bank’s penalty charge on deposits damped money-market rates.
The euro overnight index average, or Eonia, fell to just above zero, signaling banks would receive almost no interest for making the loans. Borrowing costs are tumbling after the ECB lowered its deposit rate to minus 0.1 percent on June 5 in an attempt to boost the flow of cash into the economy and stave off the threat of deflation. German 10-year bunds slipped today, paring a weekly advance. Italy’s bonds declined as the nation sold securities in an exchange auction.