Wise money markets wait for central banks’ interest rates decisions

In light of further warnings by S&P the ratings agency on the possibility of downgrades to a whole host of European banks as well as the triple-A rating of France and Germany, the wise money markets are beginning to ask if the rating agencies actually matter any more. Wise money markets wait for central banks' interest rates decisionsWhy are they six months late to the party?

The market has been asking questions about the health of European banks for long enough for it to be widely accepted, even by the general public.

John Heimann, former vice chairman of Merrill Lynch, suggests the function of the rating agencies is to “visit the field at the end of the battle and shoot the wounded”.

Let’s hope the market shrugs of the news as quickly as the announcement earlier in the week and moves onto the more pressing matters of an ECB interest rate decision today and the announcement tomorrow over further fiscal integration of the eurozone.

Regarding the latter there was fierce debate in the House of Commons yesterday over how any treaty changes would impact on the British economy with several Tory’s including the Mayor of London calling for a referendum on the matter.

The two day meeting has not started but Britain has already been told off by Jean-Claude Juncker, head of the group of euro nations.

He was quoted as saying he does not want the UK setting aside entire pages to say the UK will not do what the others have to do.

Sterling remains relatively unchanged as a storm blows around it, but that may change against both the Dollar and Euro if the ECB, as expected, cut interest rates again.

The Bank of England is certain to keep rates unchanged but may increase the size of the asset purchase scheme (QE) in reaction to the slowdown in the British Economy.

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