As expected, the actual cash rate – which is the rate banks charge to lend out funds to other banks overnight – declined below the cash rate target (Graph 1). It settled at around 13 basis points, which is just above the 10 basis points that banks receive on surplus Exchange Settlement (ES) balances in their accounts at the Reserve Bank.
So we need eurozone Member States, starting with Germany and with France, to lead the discussion, and I very much hope, I’m very confident now, that that discussion will start. Does the UK election last week make your job harder or easier? Well, the UK is not so important for the eurozone economy.