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In Shocking Move, ECB Cuts By 10 Bps, Sends Deposit Rate Further Into Negative Territory

Submitted by Tyler Durden on 09/04/2014 07:49 -0400

While everyone was expecting Mario Draghi to announce ABS purchases, few if any had expected the ECB to also cut rates. Which it just did whacking its corridor rates across the board by 10 bps, in the process sending the Deposit Facility rate even further into negative territory, now down at -0.2%.

From the ECB's monetary policy decision:

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

The interest rate on the main refinancing operations of the Eurosystem will be decreased by 10 basis points to 0.05%, starting from the operation to be settled on 10 September 2014.

The interest rate on the marginal lending facility will be decreased by 10 basis points to 0.30%, with effect from 10 September 2014.

The interest rate on the deposit facility will be decreased by 10 basis points to -0.20%, with effect from 10 September 2014.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

To be sure, the EURUSD is down nearly 100 pips on the news, and this is even before Draghi has announced his "Private QE" which announcement is due in 45 minutes.

So now that it will cost Europeans even more to deposit money at the bank, here is a snapshot of how delighted, giddy locals from the Old Continent are reacting to this latest ploy to fix "stuff" by the ECB.

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Thu, 09/04/2014 - 08:32 | 5179183 Apply Force

Not yet - Sept 10th. Gotta bump that money velocity to keep all of the European cash hoarders spending s/

Thu, 09/04/2014 - 08:22 | 5179140 AdvancingTime

The games central bankers are playing in supporting their and other currencies has reached a dangerous level, we may be in the "red zone". Currencies are important chips in the commerce of government and the business of running a country. History has shown that in the past both leaders and governments have fallen with the demise of their coin.

If people lose faith in the system it could just come crashing down around our ears. At a time when billions of dollars can be traded in just the blink of an eye imagine how fast things could go to hell. Today we are one step closer to reaching the end game. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/01/currencies-games-in-danger-zone.h...

Thu, 09/04/2014 - 08:25 | 5179148 Kina

Well of course this is a sure sign that European economy is a whole lot worse than the worse that we see.....

the patient is in intensive care......what they need now is a trade war, and their power cut back......self destruct some of their industry for US geopolitical games... that should be good for negative GDP

Thu, 09/04/2014 - 08:25 | 5179154 moonman

ECB surprises with rate cuts amid recovery fears

Yahoo headline.

Are they afraid of the recovery?

Thu, 09/04/2014 - 08:27 | 5179159 orangegeek

USD has been up sharply since July as expected

http://bullandbearmash.com/chart/dollar-daily-pulls-offsetting-currencie...

You can own all the PMs you want, but they are flat and likely to head lower.

You can down-vote starting....wait for it......now!

Thu, 09/04/2014 - 08:27 | 5179160 youngman

Now I want those Spanish 50 year bonds....

Thu, 09/04/2014 - 08:46 | 5179193 GetZeeGold

How much can we put you down for......we gots lots.

We'll get you right in after Belgium.

Thu, 09/04/2014 - 08:27 | 5179162 gcjohns1971

Meanwhile on the other side of the Pond...

The St Louis Fed blames the recession on the Common Man's "Money Hoarding".

http://www.cnbc.com/id/101963821

45 years of flat icomes? No. That has nothing to do with it.

Marginal total tax rates over 50%? No. That has nothing to do with it.

Too much debt to qualify for more loans? Nope.

Start-up killing levels of regulation, preventing job market entrants from getting jobs, starting families, establishing new households? Nope.

Fed equity market generosity outbidding start-ups for loans? Nope.

Nope. Average people are just hoarding money. They are just stuffing it in mattresses, hiding it in walls, paying off their debts.

Why, by measure of the demand gap alone every single American must have $30K-$50K hidden around their houses.

OR...

The Fed could be manned by retards.

Thu, 09/04/2014 - 08:30 | 5179175 gcjohns1971

P.S. QE will return no later than the January Meeting.

P.P.S. I would bet on a 'Christmas Surprize' to 'stimulate' holiday spending.

Thu, 09/04/2014 - 08:35 | 5179198 Apply Force

Maybe a Thanksgiving helicopter drop??

Thu, 09/04/2014 - 10:35 | 5179714 BeerMe

Do you feel better with the Fed manned by retards or evil banksters? I'm coming to the conclusion that they probably are just retards.

Thu, 09/04/2014 - 08:28 | 5179165 horot

So, Draghi is trying to revive the zombie euro. Smh.

Thu, 09/04/2014 - 08:29 | 5179168 hotrod

guess that strong dollar gonna make oil real cheap and gas sub $3 before election time.

Thu, 09/04/2014 - 08:29 | 5179170 youngman

Gold in Euros has to be going up....

Thu, 09/04/2014 - 08:30 | 5179172 BeetleBailey

<---short at 1.3202 since last week....lovely....

Thu, 09/04/2014 - 15:01 | 5181064 messymerry

Smartass! You're on KP till the end of next week... ;-)

Thu, 09/04/2014 - 08:31 | 5179173 highwaytoserfdom

how does this effect the NATO occupiers of Japan Europe? I'm so confused...HURRY UP BRICS BRENTON IS A MULLIGAN. Our education, health, police, prison, millitary offensive complex and Chinese inport sectors need to know how all those "safe service job" are going to borrow money and increase debt for Wallmart stuff.

Thu, 09/04/2014 - 08:30 | 5179177 tradewithdave

Guess they gotta pay Larry Fink his "non-conflicted fee" up front. #winning

Thu, 09/04/2014 - 08:33 | 5179190 Atomizer

Wait until Scotland removes itself from EU parasite membership.

Thu, 09/04/2014 - 09:11 | 5179361 oudinot

Moron: Scotland is not in EU; if they win their separation vote they want to join the EU

Thu, 09/04/2014 - 10:15 | 5179604 Jano

Moron: Scotland voting Yes to leave the UK, brings them out of the EU.

Thu, 09/04/2014 - 08:35 | 5179197 sudzee

I have been mortgage free for 15 years. I am now waiting for a call from the bank offering me 500k and pay me 1k a month if I accept. Think I'll hold out for at least 1k a week. Pretty sad when c/b's have to pay to get rid the toilet paper they print.

Thu, 09/04/2014 - 08:36 | 5179204 jubber

another MONSTER ramp in Indexes!!!!!!!!

DAX NOW UP 175

FTSEMIB UP 575

IBEX UP 200

CAC UP 100

Thu, 09/04/2014 - 08:36 | 5179205 dcau1

Even Charles Ponzi himself would be taking notes.

Thu, 09/04/2014 - 08:38 | 5179208 Kina

Germany's gold is gone forever. Even if they invaded and took over the USA....they wouldn't find any gold. Just piles of worthless FRN

Thu, 09/04/2014 - 08:42 | 5179229 Kina

Everybody piles in stocks to avoid negative interst rates.....and then when stocks revert to true value....everybody loses 60% of their money. AND things then are million percent worse than before...

Good plan by the TPTB....if total economic destruction is the plan.

There is no point in forcing people to spend their savings...or move it to somewhere else....it does nothing for the economy and eventually they spend what little they have on just staying alive.

Thu, 09/04/2014 - 08:48 | 5179252 gmak