Markets
Anticipated rate cut by ECB - making things worse
Marcus Ashworth | 09 Aug 2019 00:30
The European Central Bank (ECB) will doubtless cut its overnight deposit rate even deeper than the current -0.4% at its next meeting in September. That doesn’t mean it’s the right way to try to breathe life into the euro zone economy. It might just make things worse.

By the time the ECB’s governing council gets around to making the cut official, it’s highly likely that the benchmark yield on 10-year German bonds will already be deeper in negative territory than the central bank’s deposit rate. HSBC analysts reckon 10-year bunds will end 2019 at a mind-boggling -0.8%. You now have to pay to hold any kind of German debt from the shortest maturities right out to three decades.

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