ECB Cuts Rates By 25 Basis Points, Joins Global Central Bank Extarvaganza

Submitted by Tyler Durden on 07/05/2012 07:46 -0400

• Bank of England
• BOE
• European Central Bank
• Hugh Hendry
• Hugh Hendry
• Monetary Policy

The global central bank market propping continues with the ECB following in the footsteps of the BOE and PBOC, and cutting its benchmark rate by 25 bps to 0.75%, and the deposit rate to 0%. EURUSD slides. In other news, today the BOE, PBOC and now ECB have all eased.... and ES is up a whopping 0.2%. Houston: we have a problem.
From ECB:

5 July 2012 - Monetary policy decisions

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

• The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 0.75%, starting from the operation to be settled on 11 July 2012.
• The interest rate on the marginal lending facility will be decreased by 25 basis points to 1.50%, with effect from 11 July 2012.
• The interest rate on the deposit facility will be decreased by 25 basis points to 0.00%, with effect from 11 July 2012.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

Biggest winner from today's decisions? Hugh Hendry.

Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%.

He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year