His comments that they would not go lower, however, caused the euro to surge...
ECB President Mario Draghi’s press conference comments inadvertently caused the value of the euro to bounce back this afternoon.
Fresh from announcing a new kitchen sink approach to monetary policy, Draghi – or “Bazooka Mario” as he should henceforth be known – ruled out cutting interest rates any further.
The apparent admission that it was as low as the ECB would go saw a falling euro spike sharply. The jolt means one euro will now get you 1.11 dollars.
Not that Draghi should be too perturbed about immediate fluctuations, as he looks to enliven the real economy in the Eurozone. Rallying bank stocks across Europe tentatively bode well.
As the ECB’s headline interest rate dropped to a record low of zero and deposits rates were slashed to -0.4, Draghi spoke confidently about the retreat.
Arguing that his experience with negative rates has been "very positive" thus far, Draghi confirmed it was a situation that wasn’t going away any time soon. He also made it clear he was aware of the dangers that could present themselves.
He said: "Rates will stay low, very low, for a long period of time... Does it mean we can go as negative as we want without any consequences for the banking sector? The answer is no."
The ESB will offer four-year loans to banks for very little and will go as far as paying banks to borrow if they lend to the economy.
Along with the lower rates and increase in the ECB’s quantitative easing programme, it will now engage in purchasing non-bank corporate debt as it broadens the range of assets with which it will involve itself.
It could prove an important part in the "comprehensive package" aimed at avoiding Japan’s deflated state. Draghi knows there are limits to what the ECB can do, however, and issued another call to governments to help solve the structural problems that are hindering growth.
Perhaps unsurprisingly, the news and press conference provoked plenty of Twitter jabs:
Draghi communication error? Euro shoots higher after plunging when Draghi says he doesn't anticipate need to cut rates further #euro— Sara Eisen (@SaraEisen) March 10, 2016
Euro above $1.10. Someone tell Draghi— James Mackintosh (@jmackin2) March 10, 2016
#ECB market rally now, but negative Eurozone interest rtaes are going to make fragile banks, more fragile. Unintended consequences!— David McWilliams (@davidmcw) March 10, 2016
Being destroyed by the market, Draghi is.— Yoda (@JediEconomist) March 10, 2016
A disaster this is for him...
"Unanimosity". Perfect for the ECB.— Lady FOHF (@LadyFOHF) March 10, 2016