JPM says ECB should have negative interest rate of -0.75%

View Comments

Economists say that a complete exit from the crisis will take longer than expected because policy isn’t easy enough.

In the client note they also says that the rate may be 250bps too high as the equilibrium neutral policy rate is probably lower now vs last cycle.

They growth as “lacklustre” and inflation well below the ECB target due to the ECB’s tight monetary stance “as far as the eye can see” and a reluctance to engage in it’s own QE.

They expect political and social stress of fiscal adjustment to be the catalyst for any “second act” of the crisis.

Are you listening Mr Draghi?

 

Author: Ryan Littlestone

Ryan Littlestone has been working in financial markets for more than 20 years. Wide-eyed, he stepped out of Bank station in London to join LME founding member Rudolf Wolff where he worked his way to the main order desk and brokered customer orders to the LME floor and across virtually every global market. An opportunity to help set up and run a new LIFFE floor operation saw him catch the trading bug and it wasn’t long before the pull of the pits was too great to refuse. He became a ‘local’ and has been trading his own account for more than 11 years.

3 Comments

  1. Mr Draghi is not taking any advice from anyone besides Frau Merkel. And she is insisting that euro should be strong. It is in Germany’s interests, so she does not give a shit that rest of Europe is suffering.

  2. @ Indrek:
    Why would it be in Germany’s intrest to have a strong € ?

  3. If we keep trying to use the ‘cost’ of money to determine the quantity of money via ‘policy’, then we will do well to understand our position within Fisher’s Debt-deflation Theory of Great Depressions.
    If a minus .25 percent is ‘rational’ in light of a lack of recovery, then exactly how low can we go?
    Anybody else see destabilization arising as we sink deeper into that debt cycle?
    The clear solution is being offered by former head of the UK’s Financial Servies Authority Lord Adair Turner.
    In his paper on how to achieve a new debt-free money available from Volcker’s Group of Thirty, he explains the need to divorce the money supply from the debt industry.
    http://www.group30.org/images/PDF/ReportPDFs/OP%2087.pdf
    The reason that less-than-zero cost of money sounds implausible is because it is a sign that the the debt-based system of money is broke, broken and insolvent.
    Thus, implausible.

Top

© Copyright 2014 ForexLive™  |  Advertise With Us  |  Login To Comment  |  Sitemap

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.