ECB cuts base rate to 0.15%

I thought they would have gone to at least 0.10% on the base rate as they went to the trouble of reducing it, still, welcome news for tracker holders
 
ECB Rate

Only reason they did'nt cut to 0% was to give themselves another month or two before QE. Hard to see .10% change in base rate making any difference to inflation/consumer confidence.
 
The base rate will never hit zero. They know themselves that cutting it to 0.15 was just a token gesture as at 0.25, the rate was already at practically zero. The negative interest rates on the deposit side is the bigger story and whatever else they announce at the press conference. Government bond yields are going to tumble.
 
Sunny said:
The negative interest rates on the deposit side is the bigger story . .
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I don't quite understand that move . . does it simply mean that retail banks won't have money on deposit with the ECB? what odds will that make?
 
Well the new thing is the TLTRO. (I love the way they create new terms). Banks can borrow against what they lend into the 'real' economy.
 
michaelm said:
I don't quite understand that move . . does it simply mean that retail banks won't have money on deposit with the ECB? what odds will that make?
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In theory it means banks will have to pay to leave money on deposit with the ECB. The idea behind it is that banks will have put their excess liquidity to use. What difference it will make in practical terms? Very little I would say. The banks will just pile into short term low yield assets instead of using it to lend money into the economy. Or else they will just pay the charge.

It could lead to a fall in the Euro though which might be what the ECB realy want.
 
a weakened euro is a target outcome - I read yesterday that an ECB board member expects the ECB rate to stay at its present level for 'several years' long after the US and UK start increasing their base rates
 
What does that mean for joe public on the ground in Ireland?

Inflation?

Deflation?

Stagnation?
 
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