Rate cuts could shrink commercial paper market

By Kathleen Gallagher
31 Jan 2014

The European Central Bank could cut its deposit rate to a negative number in the coming months, which will shrink the euro commercial paper market, according to dealers. But not all market participants agree.

The ECB is likely to slash its deposit rate to minus 10bp in February or March, according to a Barclays report released this week.

“If they cut rates commercial paper volumes will shrink dramatically,” said a CP dealer. “Money market funds will move their money. They have already started ...

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