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Flash: Is the ECB Going to Adopt a Negative Deposit Rate? - BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that ECB President Draghi raised the possibility of a negative deposit rate at the ECB meeting earlier this month.

They feel that if the goal is to help revive lending, especially to small and medium sized business and improve the transmission mechanism of monetary policy, then they expect a serious analysis to highlight the risks and downplay the likely benefits. That said, they write, “As ECB President Draghi has surprised many observers with his boldness (such as unwinding both to Trichet's rate hikes in his first two meetings) and his ability to innovate (two LTROs and the OMT).” At the same time, they note that OMT has worked by brandishing it, not actually deploying it and the dramatic success that moral suasion was not lost on Draghi. They write, “We suggest the negative deposit rate is more like the OMT than the LTRO.”

American equity markets start week off positively

The US stock market opened higher Tuesday, after many investors returned after a long holiday weekend. In the United States, the S&P/Case-Schiller Home Price Indices (YoY) grew a steadfast +10.9% in March, beating expectations of +10.2%.
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AUD/USD stalls ahead of 0.9700

The Australian dollar managed to trim last days' losses versus the greenback on Tuesday, underpinned by the rally seen in stocks.
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