Tuesday, November 26, 2013

A Look at the Euro Area's Lost Decade So Far: Bad Loans, Negative Loan Growth, High Unemployment, Deflation Risk, French GDP is Slowing. Will the ECB Go Negative?

The Eurozone's Great Distression could force the ECB to move its deposit rate into negative territory.

Bloomberg.com: "European Central Bank Governing Council member Ardo Hansson said the ECB stands ready to cut borrowing costs further and is technically prepared to make its deposit rate negative."

Independent.ie: "European Central Bank Executive Board member Joerg Asmussen said the European Central Bank was ready to take further action if necessary and instruments at its disposal included negative deposit rates."

RTE.ie: "European Central Bank Governing Council member Christian Noyer has said that interest rates have to remain low for an extended period."

Reuters: "The European Central Bank has discussed charging lenders for the privilege of putting money on deposit. It would be a radical move, enacted through negative interest rates, aiming to encourage banks to lend to the real economy. But such a policy should be embraced with care."

MarketWatch: "Fed’s reserve hint may help ECB rate cut to negative territory. The U.S. Federal Reserve has offered the European Central Bank important indirect support promoting the euro bloc’s likely destination of negative interest rates on bank deposits at the central bank in early 2014."

Here is a firehose of depressing euro area data.

Euro Area Inflation and M3 (money) Annual Growth Rates

Source: ECB

Source: ECB

Source: Thomson Reuters Datastream



Source: ECB

Source: Bank of Italy (PDF)



Source: Trading Economics

French Quarterly GDP Growth Rate
Source: INSEE.fr

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