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Posts by "macrosam"
189 Posts Total by "macrosam":
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Posts by Anonymous "macrosam":
Since the full-allocation repos were introduced, banks took more liquidity than needed, evidenced by the recycling of this excess at the ECB deposit facility. This drove EONIA down close to the Deposit Rate. When liquidity is equal to need (no excess), EONIA should trade close to the refi rate. Banks pay 75bps in negative carry when depositing at the ECB. Banks will only be willing to incur the 75bps of negative carry for so long.
This all assumes there is no looming catastrophe that reinforces the demand for excess liquidity. A big assumption to make.
We are living through The Great Experiment
By Scott Hamilton
June 29 (Bloomberg) -- Bank of England Markets Director Paul Fisher said that the central banks mandate is clear on what to do if inflation pressures in the economy persist in the medium term.
While we need to be sensitive to the risk of tightening policy prematurely, Fisher said, should it appear likely that inflationary pressure is sustained at a higher level into the medium term, then it is clear what our mandate would require us to do. Fisher made the comments in a speech on June 14 in Liverpool, England. The remarks were released today by the bank.
I will not make any comments on Facebook to those I converse with on that format other than a "game well played".