The Reuters ECB story has sparked a big discussion in our trading room
As per the earlier report, the ECB are apparently looking to tier the deposit rate, effectively giving cashback to banks. That’s got EU banking shares up as it means a boost to profits, and it has rate watchers viewing it as the depo rate staying low for longer (ECB staying easy, EUR negative). However, in plain and simple terms, either banks are paying 40 points for depositing excess reserves or they’re not, however you play the maths.
I’m siding with the fact that this is a stealth hike and I’m surprised the Euro isn’t higher on this news (even if it’s just an unconfirmed sources piece.
Further conjuring from the magician? What do you reckon?
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