Thursday, November 3, 2011

03/11/2011: ECB rate cut

ECB decision to reduce rates by 25bps today has led to a dramatic reduction of the ECB overall rate premium over the basket of advanced economies rates as shown below. With today's decision, the ECB premium declines from 16.73% in October to 1.21% in November (barring any change in the BofE rate later).


This move, however, directly contradicts ECB mandate for price stability with inflation for October anchored at 3.0%:

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