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Saturday, May 4, 2013

ECB - lower interest rates will only help the banks - their interest rate spreads grew by the action taken - they are making even more money to the disadvantage of the population

First, based on our regular economic and monetary analyses, we decided to lower the interest rate on the main refinancing operations of the Eurosystem by 25 basis points to 0.50% and the rate on the marginal lending facility by 50 basis points to 1.00%. The rate on the deposit facility will remain unchanged at 0.00%. These decisions are consistent with low underlying price pressure over the medium term. Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. In keeping with this picture, monetary and loan dynamics remain subdued. At the same time, weak economic sentiment has extended into spring of this year. The cut in interest rates should contribute to support prospects for a recovery later in the year. Against this overall background, our monetary policy stance will remain accommodative for as long as needed. In the period ahead, we will monitor very closely all incoming information on economic and monetary developments and assess any impact on the outlook for price stability.

Whatever they do, it does not help. Given the sluggish economy all over the EU, this interest rate manipulation will never reach scared people about to freak out because of austerity. The shock of austerity will lead to keep the money safe. This even out of the banks because the governments are not to be trusted any more. Savings above EUR 100'000 were not safe in Cyprus. Are they safe anywhere else. The faults of the politicians are to be paid by the people. Thus the latter have to take appropriate measures.

copyright  thomas ramseyer