8 ms·

ECB holds key interest rate at 4%

41 points by s4i 3y ago

josecapurro 3y ago
http://archive.today/HOFX0 http://archive.today/HOFX0
belter 3y ago
"Eurozone economic downturn looms as business orders fall" - https://www.ft.com/content/148adc6b-98f3-4655-a92b-913a232c9eef https://www.ft.com/content/148adc6b-98f3-4655-a92b-913a232c9... Congratulations ECB..Another job well done /s
- bilekas 3y ago
  The decision aligns the ECB with the US Federal Reserve and the Bank of England. Economies ebb and flow.. that's how things have always worked. Interest fluctuations are a mechanism to manage it. What is your problem with the ECB doing it's job exactly?
  - belter 3y ago
    They did it too late causing a recession. The Internet archive will store this discussion, and 3-4 years down from now, when they will get their "Alan Greenspan I Did Not Know How The Economy Really Works" moment...I will be back...
    - keep_reading 3y ago
      This is correct and the naysayers either have amnesia or are hopelessly optimistic that central planning works.
    - belter 3y ago
      Well...well...It seems we don't even have to wait 3 years. Interview from today from Mrs Lagarde. The mea culpas alread started... "Christine Lagarde: ‘I should have been bolder’" - https://archive.ph/47udO https://archive.ph/47udO “...But what we should have learned is that we cannot just rely only on textbook cases and pure models. We have to think with a broader horizon...”
- scotty79 3y ago
  Trying to influence business growth with interest rates is the dumbest idea ever. Interest rate manipulation should serve one and only one purpose. Controlling inflation. It's very important goal and any politically motivated moves that are supposed to influence the economy interfere with that goal.
  - marcosdumay 3y ago
    Hum... IMO the government lending interest rate should be set strictly at the highest value that still ensures bank healthy and should have absolutely no concern for the overall economy. Inflation should be managed directly by fiscal policy. Having your central bank do it is a wishful fantasy that only serves to concentrate wealth and create instability with years-long hidden feedback loops. And oh, it also serves to excuse politicians out of their responsibility. But then, I don't see how something that only serves to make rich people richer and make excuses for politicians can ever change. So I'm not holding my breath.
  - Wytwwww 3y ago
    The Fed has a dual mandate of controlling inflation AND minimizing the unemployment rate. You have to try to influence business growth to accomplish the second goal and it makes perfect sense.
    - scotty79 3y ago
      Yes. And that's dumb. And the only way US could get away with it for so long was because it printed money for the global economy. So the whole world cushioned their meddling. In recent years their messed up so badly that even global economy sqealed as it could no longer bear the burden. Any other country or even EU, doing the same thing as FED does, would be in deep trouble in less than a decade.
      - Wytwwww 3y ago
        > Any other country or even EU, Wasn't the scale of QE as proportion of GDP significantly larger in the Eurozone in the 2010s? Even now the total value of assets held by the ECB is only a bit lower than the Fed ($7.44 trillion vs 7.9). The situation before the pandemic was similar, the ECB even had more assets than the Fed throughout 2019.
- belter 3y ago
  The ECB is the most error prone central bank in history and the Eurozone recession that is coming, will soon put people asking the right questions. Slow to react to inflation, raised rates too late, causing the coming recession. Your downvotes wont help your disposable income... "ECB core obsession raises risk of policy mistake" - https://www.reuters.com/breakingviews/ecb-core-obsession-raises-risk-policy-mistake-2023-08-17/ https://www.reuters.com/breakingviews/ecb-core-obsession-rai... "Fears of repeating 2011 mistake led to ECB split on latest interest rate rise" - https://www.ft.com/content/003bfc9f-3af2-4ae9-b582-7d27b75afe7c https://www.ft.com/content/003bfc9f-3af2-4ae9-b582-7d27b75af... "Christine Lagarde’s Gifts to Populists" - https://www.project-syndicate.org/commentary/lagarde-ecb-mistakes-boon-for-european-populists-by-yanis-varoufakis-2023-09 https://www.project-syndicate.org/commentary/lagarde-ecb-mis... The process of washing their hands starting back in 2022: "ECB issues mea culpa for poor inflation forecasts" - https://www.ft.com/content/58d45527-8d57-43c3-b2b0-d77a19d101b8 https://www.ft.com/content/58d45527-8d57-43c3-b2b0-d77a19d10... "What explains recent errors in the inflation projections of Eurosystem and ECB staff?" - https://www.ecb.europa.eu/pub/economic-bulletin/focus/2022/html/ecb.ebbox202203_05~6d1fb8f5b0.en.html https://www.ecb.europa.eu/pub/economic-bulletin/focus/2022/h...
  - onlyrealcuzzo 3y ago
    > Slow to react to inflation They were slow intentionally. A large subset of the population benefits from low interest rates. They were reluctant to give up their free money they designed their lives around. If interest rates were ever to reflect reality long-term, probably ~50% of global wealth would be wiped out. If not for the majority of the population being leveraged on real estate - the ordinary person wouldn't really care. It's generally not fun when your largest position (your home) goes down ~50% of 5:1 leverage (the average home owner).
cmrdporcupine 3y ago
Bank of Canada also held its rate at its Wednesday announcement. Meanwhile housing prices rage out of control, many working class people can't afford rent even in peripheral cities, and there's homeless encampments in most public parks. But this is not a factor they consider when setting the rate. And somehow the public narrative has shifted so that high interest rates (not even actually high by historic standards) are to blame for the affordability problem, and not the bubble in housing prices that was created by low interest rates (compounded by low supply) in the first place. Seems the central banks is content with having gotten unemployment rates back up again and wage growth down, and the provincial governments are happy to sit and do really nothing about real estate regulations and serious housing construction while everybody points the finger at the (ineffective and terrible) federal government, who actually can't do much about this situation . Yay.
- onlyrealcuzzo 3y ago
  Not sure what's confusing. >60% of people own a home - it's their largest investment & it's leveraged. They want it to go up, not down. In Canada, you don't have fixed mortgages. If interest rates go up - they're largest expense is going to go up A LOT. They're going to vote to make sure that doesn't happen. Nobody cares about people trying to get into the market - unfortunately. Governments are typically in the business of protecting wealth, not destroying it. However, recent central bank shenanigans have led them to be able to create wealth by lowering interest rates - and that is distributed highly unevenly. They don't care. >50% of people are on the winning side of the trade, and majority rules. Not sure about in Canada - but in the US - the winning side is doing their best to suppress the losing side from voting. Don't fight the system. Get stronger from it.
  - cmrdporcupine 3y ago
    I don't think I said I was confused by it? I understand the levers in motion. But it's clear that in the longer term this doesn't work -- even for the majority home owners like you imply. a) Just because your home appears to go up in value doesn't mean that your home purchasing power has, if other homes have just done the same. b) It undermines local business because their workers increasingly cannot afford to live where they work. When rent in a 2 bedroom in an industrial town like Hamilton creeps up to $3000, we've hit crisis proportions. c) it's not sustainable, and will eventually blow. What it shows is that there's no leadership at the top capable of making adult decisions.
arbuge 3y ago
Long rates doing more to slow things down at the moment than short.Central banks know that, and probably don't mind at all.

41 points by s4i 3y ago

http://archive.today/HOFX0 http://archive.today/HOFX0

"Eurozone economic downturn looms as business orders fall" - https://www.ft.com/content/148adc6b-98f3-4655-a92b-913a232c9eef https://www.ft.com/content/148adc6b-98f3-4655-a92b-913a232c9... Congratulations ECB..Another job well done /s

bilekas 3y ago
The decision aligns the ECB with the US Federal Reserve and the Bank of England. Economies ebb and flow.. that's how things have always worked. Interest fluctuations are a mechanism to manage it. What is your problem with the ECB doing it's job exactly?
- belter 3y ago
  They did it too late causing a recession. The Internet archive will store this discussion, and 3-4 years down from now, when they will get their "Alan Greenspan I Did Not Know How The Economy Really Works" moment...I will be back...
  - keep_reading 3y ago
    This is correct and the naysayers either have amnesia or are hopelessly optimistic that central planning works.
  - belter 3y ago
    Well...well...It seems we don't even have to wait 3 years. Interview from today from Mrs Lagarde. The mea culpas alread started... "Christine Lagarde: ‘I should have been bolder’" - https://archive.ph/47udO https://archive.ph/47udO “...But what we should have learned is that we cannot just rely only on textbook cases and pure models. We have to think with a broader horizon...”
scotty79 3y ago
Trying to influence business growth with interest rates is the dumbest idea ever. Interest rate manipulation should serve one and only one purpose. Controlling inflation. It's very important goal and any politically motivated moves that are supposed to influence the economy interfere with that goal.
- marcosdumay 3y ago
  Hum... IMO the government lending interest rate should be set strictly at the highest value that still ensures bank healthy and should have absolutely no concern for the overall economy. Inflation should be managed directly by fiscal policy. Having your central bank do it is a wishful fantasy that only serves to concentrate wealth and create instability with years-long hidden feedback loops. And oh, it also serves to excuse politicians out of their responsibility. But then, I don't see how something that only serves to make rich people richer and make excuses for politicians can ever change. So I'm not holding my breath.
- Wytwwww 3y ago
  The Fed has a dual mandate of controlling inflation AND minimizing the unemployment rate. You have to try to influence business growth to accomplish the second goal and it makes perfect sense.
  - scotty79 3y ago
    Yes. And that's dumb. And the only way US could get away with it for so long was because it printed money for the global economy. So the whole world cushioned their meddling. In recent years their messed up so badly that even global economy sqealed as it could no longer bear the burden. Any other country or even EU, doing the same thing as FED does, would be in deep trouble in less than a decade.
    - Wytwwww 3y ago
      > Any other country or even EU, Wasn't the scale of QE as proportion of GDP significantly larger in the Eurozone in the 2010s? Even now the total value of assets held by the ECB is only a bit lower than the Fed ($7.44 trillion vs 7.9). The situation before the pandemic was similar, the ECB even had more assets than the Fed throughout 2019.
belter 3y ago
The ECB is the most error prone central bank in history and the Eurozone recession that is coming, will soon put people asking the right questions. Slow to react to inflation, raised rates too late, causing the coming recession. Your downvotes wont help your disposable income... "ECB core obsession raises risk of policy mistake" - https://www.reuters.com/breakingviews/ecb-core-obsession-raises-risk-policy-mistake-2023-08-17/ https://www.reuters.com/breakingviews/ecb-core-obsession-rai... "Fears of repeating 2011 mistake led to ECB split on latest interest rate rise" - https://www.ft.com/content/003bfc9f-3af2-4ae9-b582-7d27b75afe7c https://www.ft.com/content/003bfc9f-3af2-4ae9-b582-7d27b75af... "Christine Lagarde’s Gifts to Populists" - https://www.project-syndicate.org/commentary/lagarde-ecb-mistakes-boon-for-european-populists-by-yanis-varoufakis-2023-09 https://www.project-syndicate.org/commentary/lagarde-ecb-mis... The process of washing their hands starting back in 2022: "ECB issues mea culpa for poor inflation forecasts" - https://www.ft.com/content/58d45527-8d57-43c3-b2b0-d77a19d101b8 https://www.ft.com/content/58d45527-8d57-43c3-b2b0-d77a19d10... "What explains recent errors in the inflation projections of Eurosystem and ECB staff?" - https://www.ecb.europa.eu/pub/economic-bulletin/focus/2022/html/ecb.ebbox202203_05~6d1fb8f5b0.en.html https://www.ecb.europa.eu/pub/economic-bulletin/focus/2022/h...
- onlyrealcuzzo 3y ago
  > Slow to react to inflation They were slow intentionally. A large subset of the population benefits from low interest rates. They were reluctant to give up their free money they designed their lives around. If interest rates were ever to reflect reality long-term, probably ~50% of global wealth would be wiped out. If not for the majority of the population being leveraged on real estate - the ordinary person wouldn't really care. It's generally not fun when your largest position (your home) goes down ~50% of 5:1 leverage (the average home owner).

cmrdporcupine 3y ago

Bank of Canada also held its rate at its Wednesday announcement. Meanwhile housing prices rage out of control, many working class people can't afford rent even in peripheral cities, and there's homeless encampments in most public parks. But this is not a factor they consider when setting the rate. And somehow the public narrative has shifted so that high interest rates (not even actually high by historic standards) are to blame for the affordability problem, and not the bubble in housing prices that was created by low interest rates (compounded by low supply) in the first place. Seems the central banks is content with having gotten unemployment rates back up again and wage growth down, and the provincial governments are happy to sit and do really nothing about real estate regulations and serious housing construction while everybody points the finger at the (ineffective and terrible) federal government, who actually can't do much about this situation . Yay.

onlyrealcuzzo 3y ago
Not sure what's confusing. >60% of people own a home - it's their largest investment & it's leveraged. They want it to go up, not down. In Canada, you don't have fixed mortgages. If interest rates go up - they're largest expense is going to go up A LOT. They're going to vote to make sure that doesn't happen. Nobody cares about people trying to get into the market - unfortunately. Governments are typically in the business of protecting wealth, not destroying it. However, recent central bank shenanigans have led them to be able to create wealth by lowering interest rates - and that is distributed highly unevenly. They don't care. >50% of people are on the winning side of the trade, and majority rules. Not sure about in Canada - but in the US - the winning side is doing their best to suppress the losing side from voting. Don't fight the system. Get stronger from it.
- cmrdporcupine 3y ago
  I don't think I said I was confused by it? I understand the levers in motion. But it's clear that in the longer term this doesn't work -- even for the majority home owners like you imply. a) Just because your home appears to go up in value doesn't mean that your home purchasing power has, if other homes have just done the same. b) It undermines local business because their workers increasingly cannot afford to live where they work. When rent in a 2 bedroom in an industrial town like Hamilton creeps up to $3000, we've hit crisis proportions. c) it's not sustainable, and will eventually blow. What it shows is that there's no leadership at the top capable of making adult decisions.

arbuge 3y ago

Long rates doing more to slow things down at the moment than short.Central banks know that, and probably don't mind at all.