Eurozone Policy

Eurozone policy rates to stay the same: (1.5%)

http://www.reuters.com/article/2011/10/28/us-ecb-rates-draghi-idUSTRE79R3D020111028

Euroarea yield curve(give this one time to load):

http://www.ecb.int/stats/money/yc/html/index.en.html

The Eurozone may be required to plunge rates by 1%, since their short term treasury rate is 1% below the policy rate, and they have a major deterioration in their banking sector.

They have procrastinated on lowering rates for a over a year. But to be sure, the Canadian Central Bank has not lowered its policy rate to reflect deteriorating yields in treasuries.

Central Bankers assume that they set the rates, when its actually the bond markets that set the rates. For a time, they have allowed themselves the fantasy of being in control of prices and interest rates by merely adhering to a policy rate that results in the false impression of stability.

A lower rate is the first step towards negative nominal interest rates.

-F6