LIQUIDITY NEWS. RATE REDUCTIONS EVERYWHERE!
[Latest Endogenous Liquidity Index: -64.9%; latest Global Dollar Liquidity measure: +40.3%]

As expected, central banks deliver on the interest rate front. But will it work? Not if demand for bank reserves continues to weaken. When demand for bank reserve collapses, central banks may indeed destroy liquidity, even as they lower their target for the short rate. This happened in Japan in the early 1990s. It's called the liquidity trap. Look at the comments on inflation: are we in the midst of a global liquidity trap?

. The RBNZ sets the tone. The Reserve Bank of New Zealand reduces the Official Cash Rate (OCR) from 6.5 percent to 5.0 percent. Note the comment: "Inflation is abating here and overseas". [RBNZ]

. The Riksbank: a leading indicator. The Swedish CB slashes rate in a dramatic move. The Riksbank often leads other CBs in terms of monetary policy. "The Executive Board of the Riksbank has decided to cut the repo rate by 1.75 percentage points to 2 per cent". Again: "A lower interest rate path ..." [Riksbank]

. The Old Lady moves again! The Bank of England reduces the Bank rate by a full 100 bps to 2.00%! According to the Committee: "... measures of inflation expectations fell back sharply". [BoE]

. The laggard. The ECB takes the main refinancing operations of the Eurosystem to 2.50%, own from 3.25% [ECB]