Money Markets Stock Market News

Money markets rates have moved around in recent weeks as the amount of excess funds held by banks lowered. But much of that appeared to have been the result of typical month end volatility brought on by holidays. They've since stabilized somewhat. One step the ECB could take would be to suspend their weekly funding drains, or sterilizations, that absorb the roughly EUR 170 billion in government bonds on its books from a previous bond purchase program. German and French central bankers have signaled their support. But the effects on short term rates might be limited because banks may simply borrow less from the ECB's regular lending facilities. Economic growth A key question is whether the current period of super low inflation is upending tepid recovery that started last spring. So far it hasn't. In fact, the recovery seems to be gathering steam. Purchasing managers reports and other data point to an acceleration in GDP growth during the first quarter, led by Germany. Retail sales in the bloc grew each month of the first quarter for the best quarterly rise since 2006, according to ING Bank.
That runs counter to one of the telltale signs of excessively low inflation or outright deflation: that consumers delay spending in hopes that prices will fall. Instead, low inflation seems to be giving households a much-needed income and confidence boost. Regulators have attempted to tighten bank rules by forcing them to raise additional capital and by adopting a raft of other rules contained in the Dodd-Frank financial reform law. However, there is growing concern that such rules are forcing financial activity into the "shadow banking" sector, outside the purview of regulators which is partly what led to the crisis in the first place.

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