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ECB Risks Chasing Own Tail on Bond Buying With Deposit-Rate Cut
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. The institution is already getting a preview of the likely reaction. About $453 billion of securities that are eligible in maturity terms have dropped below minus 0.3 percent since its last meeting, according to the Bloomberg Eurozone Sovereign Bond Index. With the ... (full story)