For the 2nd time since Sept, the Bank of Israel cut interest rates by 25 bps to 2.75%. The cut was in response to “the debt crisis in Europe…becoming more severe” and “the risk of Europe sliding into a recession and significant slowdown in the global economy has risen. These negative developments are already affecting the Israeli economy and their effect is expected to intensify.” While their actions are never market moving outside of Israel, it is another central bank following the ECB, Indonesia, Singapore and Australia in cutting interest rates. China also let expire a one year reserve requirement hike of 50 bps on rural co-ops last week. At the same time we have the BoJ, SNB, and BOE embarking on more QE with the Fed likely to follow again in a few weeks. On QE, BOE Gov Mervyn King today said “everyone is better off because of QE.” Nominally and in central bank terms, the Brits are better off but in real terms, it’s just an illusion as a key measure of their economic health, the FTSE stock market in gold terms priced in pounds (non debased currency terms) is below its Mar ’09 lows.
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