ECB Calls Bids For Another One-Day Tender
The ECB is calling for bit on another liquidity providing one day tender. As yesterday, the central bank did not specify a detailed allocation amount. The central bank allocated EUR 30B yesterday in order to calm market tensions and reaffirm banks that it still step in to provide liquidity when bank lending dries up. Interbank overnight rates jumped yesterday as banks are once again hording liquidity. Rates remain elevated today with the interbank overnight rate currently up 0.200 from yesterday's close at 4.425, clearly above the ECB's minimum bid rate of 4.25%. As earlier in the crisis it seems the ECB is trying to calm markets by pumping in extra funds rather than cutting interest rates.