European Central Bank Takes Deposit Rate Negative, Historic Measures to Fight Deflation
- By : JanssenReportHost
- Category : Central Banks
- Tags: #49
Yesterday, ECB-President Mario Draghi announced unprecedented measures to help stimulate the economy in the Euro Zone.
The following measures are taken:
- The Deposit Rate (interest rate for banks’ deposits at the ECB) are lowered to -0.1%, this is the first time a large central bank takes this rate negative;
- The Benchmark Rate (a minimum rate investors will accept for taking non-government securities) is lowered from 0.25% to 0.15%;
- A 400-billion-euro ($542 billion) liquidity channel tied to bank lending is opened;
- An asset-purchase plan will be developed.
Watch this episode of The Janssen Report to hear why I think this will likely have no more than a minor stimulating effect and will have a detrimental effect on the economy in the longer run:
Sources:
- Bloomberg: “Draghi Unveils Historic Measures Against Deflation Threat“;
- ZeroHedge: some background on the challenge the ECB faces.
Cheers!
Marco Janssen
