Here is how global currency warfare and the global “race to debase” works: ECB cuts rates to -0.3%, the BOJ cuts to -0.1%, then the ECB cuts to -0.7% next. At least that’s JPMorgan’s most recent forecast, which now see Mario Draghi going full NIRPtard, and cutting the ECB’s -0.3% deposit rate to -0.5% next month, and then to -0.7% in June, unleashing an epic deflationary tsunami around the globe, one which will send the USD soaring, will force more retaliation by the BOJ, will force more devaluation by the PBOC, will lead to more angry complaining by Deutsche Bank how easing is killing the bank, and so on.

When does it end? When fiat and modern neo-Keynesian economics are thoroughly discredited and when the world’s central bankers end up with fast food worker jobs.

From JPMorgan:

ECB to ease even more and cut the deposit rate to -0.7%

  • We now expect the March package to include a larger deposit rate cut of 20bp, taking it to -0.5%
  • We now expect another package after that, possibly as early as June
  • We expect this second package to take the deposit rate to -0.7% and to extent QE until end-2017
  • Our forecast change is motivated by risk management amidst low inflation, rather than a macro forecast change
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