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European Central Bank: Markets poised for rate cuts and stimulus measures - business live | Business | The Guardian

So, what might the ECB do today?

Effectively there are five tools in the monetary policy toolbox which it could grasp.... and my colleague Katie Allen has rounded them up here:

  • Cut interest rates (both the headline rate of 0.25%, and the 0.0% rate paid on bank deposits at the ECB -- which would herald negative interest rates)
  • A new programme for bank lending, perhaps fashioned like the Bank of England's funding for lending scheme which provided cheaper credit to banks.
  • It could inject more liquidity into the system by stopping 'sterilising' bond purchases it made during the eurozone crisis in 2012
  • Reviving the asset backed securities market -- to help banks package up SME loans into packages which can be told on (but with tighter controls than in the run-up to the financial crisis)
  • A full-blown QE programme -- printing euros to expand the money supply and drive inflation up

Or it could do nothing....

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jun 5th, 2014 at 05:46:44 AM EST

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