Il reference rate of the Eurozone will drop from the current 0,25% 0,15%, new all-time low, e deposit yields of European banks at the ECB will fall into negative territory, to -0,1%. These are the measures that the Governing Council of the European Central Bank will soon implement, probably as early as the meeting on 5 June, to counter the low inflation in the currency area.
The anticipation - which confirms a forecast already widely disseminated on the markets - was published today by the German weekly "Der Spiegel", which refers to the recommendations of the chief economist of the ECB, Peter Praet.
The negative deposit rate would impose a sort of custody fee on banks that deposit cash with the ECB, instead of paying them interest. Out of an amount of 100 million deposited, the annual cost would be 100 thousand euros, which would make the operation disadvantageous to say the least.
According to the weekly, the purchase of corporate and sovereign issues by the central institution would not be on the agenda. After the June meeting, the ECB will also release the new estimates on growth and inflation in the Eurozone, from which new deflation risks could emerge. But for now, no one from Frankfurt is commenting on the rumors.
