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.