ECB Key Inflation Announcement - September 2014

Sept. 4, 2014 - PRLog -- Hexagon Capital Management is a privately held wealth management company that manages hundreds of client assets in a wide range of products and services with a non biased, client orientated program that is tailored to each individual or corporate requirement.

ECB Key Inflation Announcement - September 2014

Later today see's the key European Central Bank rate decision and the subsequent speech by Mario Draghi.

Speaking out of Frankfurt little is expected from Mr. Draghi however many believe this is going to be the start of a period of QE in Europe similar to what the Federal Reserve is exiting at this time.

Several months ago the ECB implemented what was a the time rather severe measures to counter the possibility of deflation in the Eurozone. Taking the benchmark rate below zero for the first time to -0.15% and keeping interest rates at 0.1% has seen little improvement in the 28 EU member states and the ECB may be pinning its hopes on the new program ready to start on the 18th September.

In 2 weeks time banks in the Eurozone will be able to borrow money from the ECB at cheaper rates. The cheap, long-term loans are available to the banks so long as the funds are allocated to businesses and households. The scheme is available for the next 4yrs and will see banks have access to funds at just 0.1% above the benchmark. So borrowing after the 18th will cost just 0.25% for the banks that take advantage of the low cost loans.

Many analysts are uncertain as to whether this will be enough to spur the EU economy forward and break the stagnation and recession many are seeing or facing today. It may very well be the precursor to much more substantial programs in the near future yet how long the ECB will need to gauge the success of the scheme starting later this month is yet to be seen.

Markets have been cautious leading up to today and will probably remain so until the full ramifications of any announcement that was not expected has been digested.

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