Tag Archives: Eurodollar

Trichet cmnts

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Translation- they keep funding on an as needed basis, at least for now.

*DJ ECB Trichet: The ECB Is Meeting Its Resposibilities
*DJ ECB Trichet: Important That Deficit Targets Are Met
*DJ ECB Trichet: Spain Should Deepen Labor Mkt Reform
*DJ ECB Trichet: Bank Stress Tests Are Very Useful
*DJ ECB Trichet: Stress Tests Important To Do On Regular Basis
*DJ ECB Trichet: Investors Don’t Yet Appreciate Postive Actions Taken
*DJ ECB Trichet: We Permamently Watch Commodities Prices
*DJ ECB Trichet: Spain One Of Countries That Needs Deficit Cuts

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Poland cutting demand

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This has been much the same for new members that previously had higher budget deficits.

It firms the Euro and keeps unemployment higher than otherwise.

[Before the euro, tight fiscal was ‘offset’ by the national CBs bought $ (I call that ‘off balance sheet deficit spending’) which supported employment and net export growth. While exports are a real cost, and this process thereby came at a real cost to the domestic standards of living, it did make the numbers (GDP, employment) look good.]

Poland likely to slash deficit in euro convergence plan

(Thomson Financial) Poland is likely to lower the public sector deficit in its new convergence programme for joining the euro, targetting a cut in its deficit to 1 pct of gross domestic product by 2011, a deputy finance minister said today.

He also said the government would aim to cut the 2009 deficit by several billion zlotys from the 27.1 bln zlotys planned for this year.

“From the convergence programme which should be approved by the government and sent to Brussels, it is possible that in 2008 the general government deficit will be 2.6-2.7 pct (of GDP), and in 2009 2-2.5 pct,” Stanislaw Gomulka, one of Poland’s four deputy finance ministers, said today. “In 2010 it may be around 1.5 pct and in 2011, 1 pct. I think the discussion will concern these levels,” Gomulka told reporters on the sidelines of a conference in Warsaw.

Asked by Thomson Financial News about next year’s deficit, he said: “The government may assume in its work on the 2009 budget, a deficit of several billion zlotys lower than the 27.1 bln zlotys planned for 2008.” The government normally lodges its initial budget assumptions in the middle of year after several months of consultations with other ministries.

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ECB offers unlimited cash

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Good to see the ECB seems to understand it’s about price and not quantity. The reporter isn’t quite there, however.

Maybe when the smoke clears and it turns out no net euros are involved the financial press will get it right. Or maybe they will accuse the ECB of ‘tricking the markets’ by ‘taking out what the put in’ or something equally silly.

Money Market Rates Fall After ECB Offers Unlimited Extra Cash

By Gavin Finch

Dec. 18 (Bloomberg) — The interest rates bank charge each other for two-week loans in euros fell after the European Central Bank said financial institutions can get unlimited emergency cash to ease a year-end shortage in money markets.

The euro interbank offered rate for the loans fell 50 basis points to 4.45 percent, after climbing 83 basis points in the past two weeks, the European Banking Federation said today. That’s 45 basis points more than the ECB’s benchmark interest rate. The three-month borrowing rate fell 7 basis points to 4.88 percent, down from near a seven-year high.

The ECB said late yesterday it will provide as much cash as banks want at or above 4.21 percent to keep interest rates close to its 4 percent refinancing rate. Central banks, led by the Federal Reserve, are seeking to restore confidence to money markets after the collapse of the U.S. subprime-mortgage market.

“It shows how alarmed the ECB is about the turn of the year and the strains” in the market more generally, said Kit Juckes, head of fixed-income research at Royal Bank of Scotland Group Plc in London.

Deposit rates fell earlier, with the amount banks pay on three-month cash in euros falling 15 basis points to 4.76 percent. Banks borrowed 2.435 billion euros ($3.5 billion) at 5 percent yesterday, the most since Sept. 26, the ECB said today.

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