The European Central Bank cut its interest rates by a half percentage point to 2 percent on Thursday, moving to protect the continent's economy against a deep recession amid increasingly grim economic data.
Despite some apparent earlier reluctance to cut interest rates significantly in January after reducing them by 175 basis points over the previous three months, the ECB really had little option but to act again given the clear, widespread evidence that the euro zone recession is deepening.
Bottom line. Central bankers, like all bureaucrats, wait until the last minute to act. They are always late in order to avoid big mistakes. They never attempt to anticipate economic or financial events. They react.
This is the main reason why short-term interest rates are highly correlated to commodity prices, which are exquisitely driven by the markets. In other words, the markets always win.
To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
1 comment:
Are the banks bankrupt? This is what I am hearing.
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