ECB rate cut could hurt interbank lending

An ECB rate cut is unlikely because it could reduce trading in money markets, as detailed by a Reuters story.

If lenders began to borrow directly from the ECB rather than in money markets, there could be a number of negative effects. They also cite the experience in Denmark where banks began charging more for loans after introducing negative rates.

The market OIS market isn`t pricing in any chance of a rate cut in May or in the next 12 months.

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