ECB Risks Chasing Own Tail on Bond Buying With Deposit-Rate Cut
- Yields on $453 billion of eligible bonds already below -0.3%
- German 5-year yield fell below current deposit rate on Friday
Worrying About the Unknowns in ECB's Next Move
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The European Central Bank risks staying one step behind the market, even if it lowers its deposit rate next week.
A 10 basis-point cut to the minus 0.2 percent rate, which acts as a floor for the ECB’s bond-buying plan, would at a stroke make $373 billion more securities available for the program. History suggests that amount could quickly evaporate.