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ECB Cuts Rates By 25 Basis Points, Joins Global Central Bank Extarvaganza

Tyler Durden's picture




 

The global central bank market propping continues with the ECB following in the footsteps of the BOE and PBOC, and cutting its benchmark rate by 25 bps to 0.75%, and the deposit rate to 0%. EURUSD slides. In other news, today the BOE, PBOC and now ECB have all eased.... and ES is up a whopping 0.2%. Houston: we have a problem.

From ECB:

5 July 2012 - Monetary policy decisions

 

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 25 basis points to 0.75%, starting from the operation to be settled on 11 July 2012.
  • The interest rate on the marginal lending facility will be decreased by 25 basis points to 1.50%, with effect from 11 July 2012.
  • The interest rate on the deposit facility will be decreased by 25 basis points to 0.00%, with effect from 11 July 2012.

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.

Biggest winner from today's decisions? Hugh Hendry.

Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%.

 

He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year.

 

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Thu, 07/05/2012 - 07:55 | 2588223 Ghordius
Ghordius's picture

edit: "with the ECB following in the footsteps of the BOE and PBOC" - which is more or less what I'm writing since long: the policies of the ECB are reactive, the big play is between the FED (with the help of the BoE) and the PBOC.

and it all goes back to the USD global reserve status

Thu, 07/05/2012 - 07:59 | 2588248 SheepRevolution
SheepRevolution's picture

Die Keynes Die!

Thu, 07/05/2012 - 07:48 | 2588224 EscapeKey
EscapeKey's picture

Yes, the problem is clearly that debt isn't cheap enough.

Thu, 07/05/2012 - 07:59 | 2588249 JackT
JackT's picture

Absolutely! It is unfair that in a modern world a citizen of one country should be able to enslave themselves at cheaper rates than a citizen of another.

Thu, 07/05/2012 - 08:37 | 2588341 HoofHearted
HoofHearted's picture

So of course, with real rates negative, the reaction in PMs is straight down. Makes perfect sense. Everyone wants out of real assets so they can chase these 0.00-0.75% rates...

Thu, 07/05/2012 - 08:41 | 2588356 chibato
chibato's picture

But jobs beat expectations...we are saved<sarc>

Thu, 07/05/2012 - 08:01 | 2588252 HelluvaEngineer
HelluvaEngineer's picture

lulz.  ES just turned red.

Thu, 07/05/2012 - 07:49 | 2588229 ZeroPower
ZeroPower's picture

Needed a 0.50% cut, sell the euro

Thu, 07/05/2012 - 08:21 | 2588297 MillionDollarBogus_
MillionDollarBogus_'s picture

The lower the rate, the less banks trust each other.

One would assume that bankers would have a pretty good idea of the health of a competition's balance sheet.

This does not bode well, me thinks, with this rate going south....................

Thu, 07/05/2012 - 08:39 | 2588346 HoofHearted
HoofHearted's picture

So borrow from the government at 0.00-0.75% rates and buy yourself some nice Spanish debt at 6.6% or higher, some Irish debt, Italian, Greek...you could make a nice salad out of all those possibilities...

Thu, 07/05/2012 - 07:51 | 2588230 Dr. Engali
Dr. Engali's picture

Where can I get some of that free money from?

Come on ECB, where's your balls. .25 was priced in.

Thu, 07/05/2012 - 07:50 | 2588231 genr8n
genr8n's picture

Hopium balloon didn't pop.

Thu, 07/05/2012 - 07:51 | 2588233 lizzy36
lizzy36's picture

All that accomdation going to turn insolvent banks solvent right?

Thu, 07/05/2012 - 07:51 | 2588234 sockratte
sockratte's picture

where will the 800 bn deposited at the ecb go? us? apparently no opportunities in the eu...

Thu, 07/05/2012 - 08:04 | 2588255 Quinvarius
Quinvarius's picture

Schrodingers money in the banking box can not ever be quantified.  Its effects on the economy also can not be measured due to the Heinsenburg banking uncertainty principle.  These are neo-Keynesian laws of economics that supports the theory: "inflation cannot ever happen".

Thu, 07/05/2012 - 07:52 | 2588236 Racer
Racer's picture

Savers get hammered again... there is NO point keeping your money in a bank... it is far safer under the mattress. Only deal in cash transactions and keep your money away from the banksters

Thu, 07/05/2012 - 07:55 | 2588242 Al Capowned
Al Capowned's picture

 It is far safer under the mattress.

With these actions its far far safer in Silver and Gold ,but agree get your paper out the banks regardless!

Thu, 07/05/2012 - 08:31 | 2588323 CPL
CPL's picture

Savers only get hammered if they keep their capital in paper money.

 

Gold and silver as savings...the interest rate average over 4 years is around 350% so far.

 

BTW, the sale on silver and gold is over at the end of day today once the sheeple understand that England printed a half trillion+ PLUS the rate cut is as good as printing another trillion or six trillion dollars over a year.

Thu, 07/05/2012 - 07:55 | 2588241 fonzannoon
fonzannoon's picture

Is gold now down 8 bucks in USD because the USD is rising because (today) we are not easing while everyone else is?

Thu, 07/05/2012 - 07:58 | 2588245 Al Capowned
Al Capowned's picture

The cartel always hammer the price at the same time they start easing, last time there was 800 billion easing in eurozone Gold dropped $50!

 

 

Thu, 07/05/2012 - 08:01 | 2588253 Shizzmoney
Shizzmoney's picture

The US is easing but it looks strong......only because no one knows about it.

Thu, 07/05/2012 - 08:42 | 2588359 HoofHearted
HoofHearted's picture

The leper with the most fingers...

The last turd out of the bowl...

Really, people should be buying anything that is sold material- livestock, food or medical supplies, guns, bricks, arable farmland, precious metals...there's only one way for fiats to go, though the CBs have kept this game going much longer than I would have expected. These guys are smart...relative to the general public at least. Baaaaaaaaa!!!!

Thu, 07/05/2012 - 08:05 | 2588260 dexter bland
dexter bland's picture

That's right.

Because the US is the relatively strong economy and the USD is trending upwards, and the Fed is not going to  ease any time soon.

Believe it or not.

Gold doesn't get competely junked beacause there are still some that believe that a 0.25% reduction in rates by the ECB is going to lead to hyper-inflation...

BWAH-HAHAHA-HAHA

Thu, 07/05/2012 - 07:57 | 2588243 Peter K
Peter K's picture

Hugh's the man :)

Thu, 07/05/2012 - 08:01 | 2588251 moriarty
moriarty's picture

Any of you bright boys & girls know what has hit gold in the last 15 minutes?

No doubt some action to stop the folks at home seeing it for what it is in our interesting times!

 

PS @ 12.00 GMT - seems to be recovering

Thu, 07/05/2012 - 08:44 | 2588366 HoofHearted
HoofHearted's picture

My best guess is Blythe and her monkeys. Hit it hard, run the stops, pick up some contracts and get flat...and in a hurry!!!!

Thu, 07/05/2012 - 08:03 | 2588256 Hype Alert
Hype Alert's picture

Just as the economy was starting to turn too.

Thu, 07/05/2012 - 10:02 | 2588257 No Euros please...
No Euros please we&#039;re British's picture

And why not a negative rate for savers! I'd be more than happy to actually pay them, knowing my money was safe in the bank.

 

uh, sorry. /sarc

Thu, 07/05/2012 - 08:05 | 2588259 DavidC
DavidC's picture

As soon as I saw the headline and before I'd got as far as reading the post I immediately thought 'Hugh Hendry's going to be happy today' - and good for him. EVERYTHING he's spoken about in his various appearances has been correct.

DavidC

Thu, 07/05/2012 - 08:07 | 2588264 Christoph830
Christoph830's picture

That's because the PPT hasn't unlocked their computers yet...

Thu, 07/05/2012 - 08:07 | 2588265 Peter Pan
Peter Pan's picture

Instead of cutting interest rates, those central bankers should cut their throats and give the market the type of non-inflationary liquidity that woud restore the confidence of the masses.

If that's not enough, then the central banks shoud demand that bankers put their balls and bonuses on the line and then sit back and watch bankers pull their socks up.

If the Spaniards and Italians were demanding that loans from the ECB go direct to banks instead of national governments, then they should do the same with private mortgages and let those scheming bamks to either emulate or suffocate.

Thu, 07/05/2012 - 08:08 | 2588266 Confundido
Confundido's picture

And gold falls...isn't this pathetic?

Thu, 07/05/2012 - 08:28 | 2588314 Quinvarius
Quinvarius's picture

You were not expecting an attempted intervention on news that the printing presses were going to 11?  Wait for them to try and run stops at 1600, then start your stacking.

Thu, 07/05/2012 - 09:19 | 2588434 TrulyBelieving
TrulyBelieving's picture

So blatantly and obviously pathetic.  Hey, I thought market manipulation was illegal.

Thu, 07/05/2012 - 08:09 | 2588268 rsnoble
rsnoble's picture

Oh so they still have .75% to work with which equates to 3 more rate cuts while they spin around with their heads cut off trying to figure this mess out meanwhile across the pond the big satan is already at 0% and soon to be negative rates and still nothing has got better it's only got worse.

Thu, 07/05/2012 - 08:11 | 2588272 chump666
chump666's picture

lol

 

Thu, 07/05/2012 - 08:46 | 2588369 conork
conork's picture

Yet gold & silver are crashing, keep stacking!

Thu, 07/05/2012 - 09:37 | 2588432 Bansters-in-my-...
Bansters-in-my- feces's picture

That explains why gold got smacked down $35 in minutes.....

Ps.....Fuck you USATreasury and your ESF.

Fucking terrorist.

Thu, 07/05/2012 - 10:08 | 2588584 No Euros please...
No Euros please we&#039;re British's picture

Did you know that gold makes an excellent radiation shield for nuclear bunkers? The government is going to reclassify it as a strategically defensive material and ensure non falls into "terrorist" hands. Go short Lloyds of London, I predict a lot of boating accidents.

Thu, 07/05/2012 - 09:27 | 2588444 Soldfinger
Soldfinger's picture

Hugh Hendry as in Eclectica Hugh Hendry as in the fund which returned 10% in the past 3 years combined as in less than Treasuries? 

Thu, 07/05/2012 - 10:44 | 2588810 flyingpigg
flyingpigg's picture

"The interest rate on the deposit facility will be decreased by 25 basis points to 0.00%"

ECB is running out of bullets!

Refi rate at 0.75, so only 3 bullets left in that gun...

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