The pressure is clearly growing on Jean-Claude Trichet to go beyond the bond purchases he’s announced already.He’s being forced by a horde of currency/bond/sovereign vigilantes to go into full-blown quantitative easing/debt monetization. His next job: Buy the debt of failing Spanish banks.
But he’s not the only one being pushed.
Check out what’s going on in Australia.
Remember, back last October it was the first country to raise rates, an aggressive (though impressive) case of getting ahead of the curve.
Well now look.
Earlier this month the futures market had factored in another interest rate rise, maybe even two, before the end of the year. But a cut is now seen as more likely.
The market shows the expected average level for the cash rate, set by the Reserve Bank of Australia (RBA), heading down from its current 4.5 per cent to a low point of 4.35 per cent though October.
That implies a better-than-even chance of an interest rate cut to 4.25 per cent by that time.
In one of the most important bellwether economies, the market seems to be forecasting a double dip, or at least alluding to one.