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  • That modern monetary Caesar, the ECB's Draghi, is preparing to cross the interest rate Rubicon and take the ECB's discount rate into negative territory. We expect a 15bp cut in the discount and refi rates (less may disappoint markets) accompanied by some kind of liquidity injecting gesture.
  • Draghi is dressing the move as deflation defiance. That there is no Euro aggregate deflation, and the disinflation forces are temporary not structural, is to be ignored. The move will not impact disinflation directly, of course - but the reaction of the currency markets is very relevant.
  • The Bank of England is also proffering its views on rates with the conclusion of its meeting today. Here of course the concerns are about how quickly to tighten - less because of concerns on inflation, and more out of concerns about leverage and stability.
  • The US, for today only, is in the shadow of events in Europe. However, the Fed's Beige Book overnight continued to report improvements in the labour market - a slow tightening of conditions that will give cause to ponder the Fed's policy reaction next year.

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