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 [6].
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.