Market information Friday September 25th 2015

Japanese inflation has dropped for the first time since the Bank of Japan (BOJ) started its massive asset-buying program Quantitative and Qualitative Easing (QQE) in April 2013. In August prices fell by 0.1 % compared to a year earlier. It remains to be seen if Japan can prevent deflation using monetary policy. However, the fall in the consumer price index is mainly caused by low oil prices.

Yesterday, the International Monetary Fund (IMF) stated that European banks need to get rid of the “immense amounts of problematic loans”. Since 2009, the share of ‘non-performing loans’ on banks’ balance sheets has doubled. At the end of 2014, European banks held EUR 1,000 billion of such loans, most of which were provided to clients in the South-East of Europe. According to the IMF, the non-performing loans use bank capital that could be used for loans to performing clients, and as such reduce the effectiveness of monetary policy.

On Thursday, Peter Praet, the European Central Bank’s chief economist, said that central banks struggle to raise interest rates because economies have got too used to ultra-low rates. He warns that monetary tightening will be “different and more challenging” than before, because low interest rates have become a status quo instead of an “incentive for timely balance sheet repair”.

The 6M Euribor remained unchanged at 0.03%. The 10Y Swap increased by 3 basis points to 1.01%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: