European Central Bank Sticks Its Head In The Sand

We, and many others, have noted over and over how the European Central Bank is failing to recognize and failing to remedy the notion that its ship is sinking.  It was not widely expected to cut rates, but the ECB took a pass this morning on its opportunity to surprise the markets with its decision on interest rates.

The ECB left its shortest refinance rate unchanged at 1.50%.  Perhaps he biggest reason for no rate cut is that market pundits have a fear that if the ECB were to cut rates that it would be a signal that a Greek failure was imminent. 

European stocks have pulled back on some of their gains this morning and the Euro is trading slightly lower on the news.  Wouldn’t it be the “lack of news” in this case?

The bank’s only statement on the matter was as follows: “At today’s meeting, which was held in Berlin, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.50%, 2.25% and 0.75% respectively.”

JON C. OGG