The 12-month Euribor has fallen again today below 4%, just as it did two weeks ago. The interbank market considers that the European Central Bank (ECB) will have to soon put on the blinkers to exit the current cycle of tightening its monetary policy. True to his quote, the price of wholesale financing indices is reflecting this shift in expectations.
The 12-month Euribor stood at 3.983% today, Wednesday, extending the downward trend that takes it to its lowest level in five months, according to data from the European Monetary Markets Institute (EMMI) consulted by ‘La Información ‘. The cooling in financing costs is due to the bearish bias for the expectations of the monetary policy of the euro zone, after the inflation data continue to give reasons to the ECB to stop raising rates as it did uninterruptedly from July 2022 to September 2023.
The novelty, as has been reported in this newspaper, is that the slide in 1-year interest on loans between banks widens the inverted curve that is being drawn with short terms. In fact, the 6-month Euribor has remained at 4.06% while the 3-month Euribor is at 3.97%, almost the same as the same 12-month index. “It is clearly a turning point in the evolution of the index. A sign of change or stabilization,” financial sources point out.
Biggest monthly drop in 11 years
After a series of declines in the Euribor price, the monthly average for November stands at 4.026%, with only one session remaining until the end of the period and also marks its lowest level since June of this year. Compared to October, the 12-month Euribor average shows a drop of 0.134 points or 13.4 basis points, which represents the largest monthly decrease since July 2012, the month of the European bailout of Spain through its banks.
The interbank barometer is about to celebrate the second anniversary since hitting its daily all-time low on December 20, 2021, marking -0.518%. On September 21, the 12-month Euribor was trading at 4.224%, its highest level since November 2008, but since then it has experienced a decrease (-25 basis points) that already discounts a rate reduction of one quarter to .
How it is calculated and changed in the future
The Euribor is calculated through data on real financing operations provided by a panel of 19 European banks, according to the latest modification carried out by the EMMI. This club includes representatives from several European countries: Austria (Raiffeisen), Belgium (Belfius), Luxembourg (Caisse d’Epargne), Netherlands (ING), Portugal (Caixa Geral), United Kingdom (Barclays), two Italian representatives . (Intesa, Unicredito), two Germans (Deutsche and DZ), five French (SG, HSBC Continental Europe, Natixis, Crédit Agricole and BNP), and four Spanish entities.
Banco Santander, BBVA, Caixabank and Cecabank are the participants in the preparation by Spain. The Euribor, a crucial benchmark in the money market since its introduction in 1999, has played a fundamental role in reducing financing costs, easing tensions and progressively replacing national reference rates in countries adopting the euro. Since then, it has allowed citizens, like those in Spain, to enjoy the largest mortgages in history.
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