Sound bites: ECB needs another rate cut

Without a doubt, the ECB needs another rate cut. High Noon is approaching fast. The list of indictments on ECB policy failings is growing rapidly. Eurozone economic confidence remains fragile. The embryonic recovery risks slipping back into recession. Deflation remains an imminent threat. The euro is too strong. The economy is subsumed by domestic credit contraction. The banks are not lending. Consumers and businesses are not borrowing. The Eurozone is already awash with liquidity. The ECB throwing more money into the pot is hardly going to make much difference. The money is not getting through to the parts of the economy that really need it. The ECB needs to incentivise the banks into lending more. One way to do this is to cut the official deposit rate into negative territory charging the banks for holding money at the ECB. Without the lifeblood of cheaper, more abundant bank lending, the Eurozone recovery will wither on the vine. The odds are that the ECB will need to keep rates close to zero for years to come.