By James David Spellman, Principal Strategic Communications LLC.
The European Central Bank last week (September 4) unexpectedly lowered interests rates again and pushed bank deposit rates slightly more deeply into negative territory, as low inflation, weak growth, and sluggish lending to businesses suggested the Eurozone’s recovery was “losing momentum,” President Mario Draghi said. While the rate cuts grabbed the headlines, more significant are two new initiatives Draghi also unveiled to pump money into the region’s economy. Immediately afterward, the euro tumbled, bond yields fell, and stocks rallied.