The Trans-Atlantic Rate Gap Just Got Bigger
The ECB is pondering the sweet spot for borrowing costs. Slow growth and falling inflation signal another cut.
Christine Lagarde studiously declined to create news during her press conference.
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No matter how they try, sometimes central bankers can’t avoid creating an event. That’s what just happened to the European Central Bank, which announced a 25-basis-point cut in its policy rate Thursday, as was universally expected. President Christine Lagarde studiously declined to create news during her press conference. But the announcement came on a morning that also saw utterly lackluster GDP numbers in Germany and the euro zone. There are worries about the fiscal deficits in several European countries, led by France, which would normally push yields upward. But slow growth has convinced investors that the ECB is going to have to keep cutting, and so yields took a tumble: