ECB Disappoints on Easing and QE, Bank of England Stays on Hold

The ECB did not lower its official overnight rates. The official marginal lending rate is 1.50% and the refi rate is unchanged at 0.75%. The market was expecting a 0.25% rate cut. The deposit facility will remain unchanged at 0.00%. European stock markets and S&P 500 futures were all higher ahead of the announcement.

Now we will have to wait to hear at the press conference what sort of bond-buying the ECB will actually embark on. The story yesterday was that sterilized action will be taken to avoid inflationary pressure.

Again, the market was expecting a rate cut from the ECB as well as sterilized bond buying. It has been quite some time since Draghi said the “we will do whatever it takes” to maintain the integrity of the euro. Maybe Draghi should have said “maybe” when he gave that bailout speech.

JON C. OGG

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