In this video debate Mads Koefoed, Head of Macro Strategy, Saxo Bank and Steen Jakobsen, Chief Economist, Saxo Bank debate the significance of the European Central Bank's rate cut yesterday.

Mads argues that the symbolic value of the 25 basis point cut to the refinancing rate to 0.50 percent should not be undersetimated as it shows the intent of the ECB to take action. Furthermore, even though it may not have an impact on the real economy it will have an impact on market psychology. He believes the ECB is likely to announce more non-standard measures at its next rate meeting or later this year and refers to the surprise effect this has on markets like when the Securities Markets Programme (SMP) and the Outright Monetary Transactions programme (OMT) were introduced.

Steen, on the contrary, argues the ECB action is just more of the same extend and pretend behaviour seen previously and that the road back to recovery is still lacking. He strongly believes that solving the problems of Europe requires looking deeper at structural issues, adding that in this regard the ECB appears to be without ammunition and just selling hope and guarantees. The OMT programme and similar initatives are examples of extend and pretend policies and at the end of the day we are left with dirigisme and just state intervention and no price discovery - meaning that the market cannot find its own equilibrium so we will end in a dead end, he says.

See more of what Mads Koefoed and Steen Jakobsen are writing about on TradingFloor.com.