The ECB’s boost for Aussie banks

The ECB's move into negative rates will lift demand for Australian bank bonds and mortgage-backed securities, driving bank funding costs lower.

Last week, the European Central Bank moved into uncharted waters, becoming the first major central bank to announce a negative deposit rate. In somewhat of a desperate move to stimulate lending on the periphery of the eurozone and push inflation higher, ECB President Mario Draghi cut the main refinancing rate by 10 basis points to 0.15 per cent and the deposit rate from zero to minus 0.10 per cent.

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