ECB risks chasing own tail on bond buying with cut in deposit rate
It probably makes more sense for the bank to abandon deposit rate floor, says analyst
London
THE European Central Bank risks staying one step behind the market, even if it lowers its deposit rate next week.
A 10 basis-point cut to the minus 0.2 per cent rate, which acts as a floor for the ECB's bond-buying plan, would at a stroke make US$373 billion more securities available for the programme. History suggests that amount could quickly evaporate.
The institution is already getting a preview of the likely reaction. About US$453 billion of securities that are eligible…
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