The Fed have printed a lot of money, just like Japan have done for years. Now, Europe are thinking of doing the same. ECB is about to join Fed in the money printing scam. Mario Draghi will speak later today, and what can we expect?
We can see negative interest rate in Europe. Do you really know what that means? It means that you are losing your money if they are in the bank. It means that it is more attractive to put your money under the mattress. Can you belive that?
Many expect that the ECB will cut its deposit rate from zero to negative. The benchmark rate will probably also be reduced to a record low at 0,1%. If so, ECB will be the first major central bank to introduce a negative rate.
The problem for ECB and Draghi is the deflation. Their inflation goal is around 2%, but the inflation remain below 1%, and it has slowed to 0,5% last month. In March, ECB said it won`t return toward its goal until the end of 2016.
Draghi said earlier this year that large-scale asset purchases would be justified if the medium-term outlook for inflation worsens. The ECB and Bank of England have called on regulators to ease rules on asset-backed securities in Europe. That would provide a broader range of funding options for companies and create assets the ECB could buy to supply liquidity.
Rate is the Central banks tools. The lower the rate is, the bigger the problems are. What is the bank signaling if they cut the rate? It says you need to spend your money. Do not put in the bank. That`s all it is about; consumer spending. That what`s makes the world go around. A very simple concept.
European stocks are little changed before the ECB meeting today. Stoxx Europe 600 Index trading near a six-year high. U.S stock-index futures and Asian shares were also little changed. Many have waited for the news today. Will Mario Draghi shock the markets? Let`s wait and see.
07:45 a.m. EUR Minimum Bid Rate
08:30 a.m. EUR ECB Press Conference
08:30 a.m. USD Unemployment Claims
01:30 p.m USD FOMC Member Kocherlakota Speaks
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