The ECB president announced €80 billion in new asset purchases a month, up from €60 billion, and a cut in its benchmark interest rates to 0% along with a decrease on overnight deposit rates of banks to -0.04%.
This was more loosening than many experts had expected. Then suddenly Mario Draghi announced that they were done making borrowing cheaper. This is surprising as they slashed inflation expectations for 2016 from 1% to 0.1% and growth projections for the same year was slashed to 1.4% from 1.7%.
Why reduce inflation expectations by announcing that you’re done with the cutting? Anyway, I had short rant on twitter about this.
The EUR/USD fell after #Draghi announced rate cut + more QE and then soared after announcing no further cuts. pic.twitter.com/SdrxgvIHIm
— CediTalk.com (@CediTalkdotcom) March 10, 2016
Seeing as many think the purpose of the cuts is to weaken euro and make exports competitive, you don’t say something like that after.
— CediTalk.com (@CediTalkdotcom) March 10, 2016
We don’t believe you Draghi, you need more people.
— CediTalk.com (@CediTalkdotcom) March 10, 2016