BN news is reporting that most of the membership of the ECB is becoming more comfortable with cutting the deposit rate (the rate the ECB pays banks for parking money with them) from .25% to zero in order to encourage banks to use their money elsewhere such as in the interbank lending market. If the ECB does move, they will also likely cut their benchmark rate of 1.0% by a like amount. Draghi this morning hinted as such when he said “there is no inflation risk in any euro area country.” With central bank interest rates as low as they are, this move would be more symbolic than anything. The ECB next meets on July 5th and will likely cut rates then but they and others are shooting blanks at this point.
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