Short-term market interest rates in the eurozone plunged at their fastest rate for more than a decade yesterday after the European Central Bank stunned investors by pumping a record €348.6bn (£249bn) of funds into the markets. Financial Times, The Times, Guardian
The size of the injection – which was intended to calm the markets over the year-end period – was twice as big as the ECB had indicated would have been needed in normal circumstances. The bank said about 390 private sector banks in the eurozone had requested funds, which have been offered for two weeks at 4.21%, well below the previous prevailing market rate.
'The sheer magnitude of the operation caught the market off guard,' said Win Thin, Brown Brothers Harriman’s senior currency strategist, who said there was talk that banks from the US and UK might have taken funds at lower rates than they could secure from their respective markets.