BANGALORE (Reuters) - The European Central Bank will not cut its deposit rate below zero this year, according to a Reuters poll of euro money market traders taken on Monday.
The ECB reduced the deposit rate, which acts as a floor to the cost of money in the open market, to zero in July to deter banks hoarding cash with the central bank instead of lending it.
Twenty-one of 26 traders in the poll said the central bank would not cut it this year, a move that would in effect charge banks to park excess funds with it. Just five said it would.
Traders expect the ECB to allot 129 billion euros ($165 billion) at its weekly seven-day operation this week, a touch higher than the 126 billion euros maturing from last week’s tender.
They also expect the ECB to allot 25 billion euros at its one-month fine-tuning operation this week, as much as the amount maturing from last month’s tender.
Reporting by Yati Himatsingka; Polling by Namrata Anchan and Shaloo Shrivastava; Editing by Toby Chopra