ECB Leaves Interest Rates UnchangedBy Kitco News
Thursday July 21, 2016 07:57
(Kitco News) -In its first meeting following Britian’s decision to leave the European Union, the European Central Bank left interest rates unchanged Thursday.
Following its monetary policy meeting the central bank decided the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.
The gold market is not seeing much reaction to the ECB’s continued loose monetary policy. Gold priced in euros is slightly positive on the day, last trading at €1,197.55, up 0.22% on the day. The overall gold market remains relatively flat on the day with August Comex gold futures last trading at $1,319.20 an ounce, down 0.01% on the day.
Although economists were not expecting to see any move in interest rates, there are expectations that ECB Mario Draghi will signal more stimulus measures will be announced later in the year, maybe as early as September. Draghi will hold is regular press confernece at 8:30 a.m.. EDT.
“Against the backdrop of a likely slowdown in economic activity and increased risks to the inflation outlook in the context of the realised Brexit risk, we expect the ECB to be forced to act at its September Governing Council meeting by cutting the deposit rate by another 10bp (to -0.50%) and extending the duration of the asset purchase programme (APP) by six months (to September 2017 from March 2017),” said economists at Nomura.
There are growing long-term concerns regarding the impact a Brexit will have on the European Economy. Tuesday the International Monetary Fund downgraded Euro area growth for 2017 to 1.4%, down 0.2% from its April projections. Growth for 2016 was revised slightly higher to 1.6%, up 0.1% from the precious forecast.