Euro Libor Stays at 7-Year High as Credit Squeeze Persists

inflation is 3% in Eurozone - highest in decades
and the main task that ECB has is price stability

so why in the hell they should lower rates?
to save US thief banks?
 
because their target interest rate for the economy is 4% and the market is hiking it to 5%. they need to lower it a few to neutralize the credit crunch if they really want to stand pat. what they are doing right now is using the crunch to try to bring inflation down this could be very dangerous
 
Quote from Daal:

because their target interest rate for the economy is 4% and the market is hiking it to 5%. they need to lower it a few to neutralize the credit crunch if they really want to stand pat. what they are doing right now is using the crunch to try to bring inflation down this could be very dangerous
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that's not a crunch - they just pay 1% premium because of risk

ECB can't just flood money as Fed does because it doesn't help but just increases inflation
And see what now - credit crunch as you said persists and PPI inflation 7.2% yoy
3.2% mom
So is it really time for cuts?
 
well, keep in mind that debt deflation, credit contraction and panic in the banking system is much worse than high inflation. I take living in the 70's any day over the 30's, they both had booming commodities the only difference was the contraction of credit and the situation on the banking system
 
Quote from Daal:

well, keep in mind that debt deflation, credit contraction and panic in the banking system is much worse than high inflation. I take living in the 70's any day over the 30's, they both had booming commodities the only difference was the contraction of credit and the situation on the banking system
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who said you that?
you just don't know what real inflation is

I've been in Ukraine when the had 100% inflation
GDP decreased 25% each year for several years. In 10 years they had less than 10% of their GDP prior to hyperinflation phase
You can imagine what happened to the life quility level

During deflation you can at least save your money
 
LOL. they lower rates 100 basis points in a huge credit crunch that is only getting worse(and the threat of a credit contraction and asset deflation not seen since the great depression)and you guys talk about hyperinflation and helicopters. you just cant make this stuff up
 
The point is Daal that the ecb like most central banks have lost control of rates.
They can slash base rates to no effect -the actual cost of borrowing will remain where the market dictates.
The call for a cut makes no sense to me in this context. A hike might make more sense in order to get back in line with the real world.
We are supposed to be living in a capitalist, not command economy after all.
 
you fail to realize that the credit markets would been worse had they not cut. look at the huge spike in libor in august, the only thing that brought it down and calmed the markets for a while was symbolic dicount cut. I mean if you dont think the current crunch would been worse had the fed kept ignoring the market then I not going to argue anymore because your nuts, the market is throwing up with 25bp cuts, you get bernanke to hint a hike you would see libor going to the moon
 
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