Morning Brief – Euro Interest Rates and the ECB

Fri 23 Jul 2021

Euro Interest Rates and the ECB


Interest rates lower for longer to boost inflation and fears expressed about the impact of Covid on the Eurozone economy: no change there. Amid all the usual dry ECB delivery is the deathless phrase where the ECB commits to deliver “a persistently accommodative monetary policy” which President Lagarde admits is not a universally held view by all the policymakers. Italy and Portugal for example want the monetary stimulus to be larger and longer. At the other end of the scale are the Germans as their inflation is already at 2%. EUR/USD pretty much unchanged at 1.1790.


US Employment


Jobless claims higher than expected last week at 419,000 versus expectations of 350,000. What does it mean? One release does not signify anything especially due to seasonal fluctuations such as for example the annual shut down of car factories to re-tool. So just a blip? We will see. There are still in case you need to be reminded 12.4 million people in the US receiving some kind of unemployment benefits.


Small UK banks


There have been 27 new banks in the UK authorised by the Bank of England since 2013. Yesterday those smaller banks were given an assist by the Bank of England which will give them some breathing space as they grow and reach the previous threshold level of GBP15 billion where they have to issue a MREL or Minimum Requirement for own funds and Eligible Liabilities which is a form of debt that can absorb losses for a bank rather than having to depend on a bailout in the event they get into trouble. That threshold is now reset at GBP25 billion. The UK commercial banking market is still dominated by the larger banks but moves like this continue to chip away at the advantage that those big 6 banks have over their smaller competitors. GBP in a new lower range but steady v USD around 1.3750.


Rock the Casbah


It was this day in 1979 that the new leader of Iran, Grand Ayatollah Khomeini banned rock and roll as a corruptive influence on the Iranian people. If only he had stopped at that….In response British bad boy punk band the Clash led by frontman Joe Strummer released Rock the Casbah which was big (very big) in 1979 -if somewhat short on much fact based connection to Iran:


Now the King told the boogie men
You have to let that raga drop
The oil down the desert way
Has been shakin’ to the top
The Sheik he drove his Cadillac
He went a cruisin’ down the ville
The Muezzin was a standing
On the radiator grille

The Sharif don’t like it
Rockin’ the Casbah
Rockin’ the Casbah
The Sharif don’t like it
Rockin’ the Casbah
Rockin’ the Casbah

By order of the Prophet
We ban that boogie sound
Degenerate the faithful
With that crazy Casbah sound
But the Bedouin they brought out
The electric camel drum
The local guitar picker
Got his guitar picking thumb
As soon as the Sharif had cleared the square
They began to wail

The Sharif don’t like it
Rockin’ the Casbah
Rockin’ the Casbah
The Sharif don’t like it
Rockin’ the Casbah
Rockin’ the Casbah


Have a Great Weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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