Mario Draghi was up this morning to ante up in this world of central bank liar’s poker. And he went all in
The ECB chief cut the deposit rate to -0.4 for bank’s cash at the ECB and cut the benchmark rate to 0 percent. He also raised QE by $20 billion a month to $80 billion.
Draghi also said that the central bank would also by corporate investment grade debt, presumably before it becomes junk.
All of these measures show how badly the European banking system is operating. The kitchen-sink approach of throwing everything at the market will goose stock exchanges across the globe in the short term, but it will crater the euro.
Every measure Draghi could change he did not for the better. All the moves show how weak the EU economy is and how the banking system is buckling under the strain of fractured balance sheets.
While Wall Street cheerleaders will crow about the ECB’s moves due to dollar equity rise on the belief that the Fed will not be able to raise its rates until after June of this year.
I am on the record to say the Fed will not be able to raise at all this year.