66071
Mario Draghi says the central bank would remain poised to extend its accommodative monetary policy if necessary.
Mario Draghi says the central bank would remain poised to extend its accommodative monetary policy if necessary.

Euro, Gold Drop as ECB Stays Pat on Monetary Policy

Interest rates are now expected ‘to remain at present levels for an extended period’, rather than ‘at present levels or lower’

Euro, Gold Drop as ECB Stays Pat on Monetary Policy

The European Central Bank left its benchmark interest rate unchanged on Thursday and dropped any reference to a future rate cut. In a statement ECB said it expected interest rates to “remain at present levels for an extended period of time,” but added that it would be ready to extend its quantitative easing program if needed.
The ECB’s message sent the euro dipping down to $1.123 against the greenback from around $1.124, CNBC reported.
Gold prices also suffered a sharp decline on Thursday, erasing a gain for the week.
The decision marked the fifth consecutive quarter that the central bank has held rates steady at 0.00% and will come as little surprise to market watchers, who were largely anticipating a continuation of the status quo.
Mario Draghi, president of the ECB, said in a press announcement in Tallinn, Estonia, that the bank considered the risk in the region to now be “broadly balanced”. However, he tempered this view with a downward revision of the bank’s inflation projections, based on its view that struggling oil prices will continue to weigh on inflation levels.
The ECB now anticipates inflation levels of 1.5% in 2017, 1.3% in 2018 and 1.6% in 2019. This is down from the forecasts released in March, which saw inflation reaching 1.7% in 2017, 1.6% in 2018 and 1.7% in 2019.
The forecasts remain well below the central bank’s inflation target of below but close to 2%, however, they were widely expected following a leak on Wednesday which preempted the plans.

  Policy Tightening Distant
Draghi said the central bank would remain poised to extend its accommodative monetary policy if necessary.
Capital Economics’ chief European economist Jennifer McKeown said ahead of the announcement that the ECB’s announcement was likely to indicate that policy tightening is “a long way off”.
“The only change in the statement is that interest rates are now expected ‘to remain at present levels for an extended period’, rather than ‘at present levels or lower’. This tweak was broadly anticipated and the press conference seems likely to reveal that council members now see risks to the economy as balanced instead of tilted to the downside,” she added.
Saxo Bank’s John Hardy told CNBC ahead of the announcement that he believed any immediate dip in the euro during Thursday’s meeting would be short-lived, but added that the leak may have been used to prevent a euro rally.
“I think the dovish inflation forecasts that were leaked were a way to avoid the euro rallying–which I think it will eventually in the wake of today’s meeting, even if there is a brief dip because very little new is actually announced,” he noted.

  Euro Drops
The Bloomberg euro index dropped as much as 0.5% after the European Central Bank left rates and policies unchanged while trimming expectations for inflation through 2019.
The euro declined versus all of its G-10 peers and fell below 1.120 versus the dollar, it’s lowest this month, amid selling by interbank and short-term trading accounts, some of which were unwinding stale euro longs.
EUR may find technical support at 1.116, the low from May 31, with additional support likely ahead of 1.110, where around €8.7 billion($9.73 billion) of option expiries roll off Friday.

  Gold Erases Weekly Gain
Gold prices suffered a sharp decline on Thursday, erasing a gain for the week as the euro weakened, providing support for the dollar, in the wake of the European Central Bank’s monetary-policy meeting.
The yellow metal failed to find support from former Federal Bureau of Investigation boss James Comey’s testimony before a Senate panel amid an investigation into alleged Russian efforts to interfere in last year’s presidential race. Investors are also awaiting the outcome of the UK’s snap general election.
August gold fell $13.70, or 1.1%, to settle at $1,279.50 an ounce—the lowest finish in a week. Thursday’s loss erased what would have been a gain for the week. Prices have now lost 70 cents week to date.

Short URL : https://goo.gl/rPaqY9
  1. https://goo.gl/eEOr3c
  • https://goo.gl/NwtSBb
  • https://goo.gl/E99Tev
  • https://goo.gl/qGaZMe
  • https://goo.gl/Ro0wYo

You can also read ...

US has accused ABLV of money laundering and breaching  sanctions on North Korea.
The European Central Bank said Saturday it has determined that...
Mexico Hosts 39 Million Tourists, Earns $21 Billion
Mexico saw record revenues from international tourism in 2017...
S&P Ups Russia to Investment Grade
Russia received a long-awaited upgrade to its sovereign rating...
Debt to GDP ratios across the OECD averaged 73% last year and its members are set to borrow $14.67 trillion from the markets this year.
The world economy is at risk from a rising tide of government...
Peru Deficit Narrows
Peru had a current account deficit of 1.3% of the gross...
China’s Geely Buys $9 Billion Daimler Stake
The founder of Zhejiang Geely Holding Group Co. has...
Manafort Indictment Spells Trouble for Bankers
Recently filed federal charges against President Donald Trump’...
Thorny issues such as content rules for  cars remain unsolved.
It’s looking increasingly likely Nafta talks will extend...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus