ECB's Lagarde sees light at the end of the pandemic tunnel, maintains accommodative monetary policy
(Kitco News) - A deluge of positive U.S. economic data and no new action from the European Central Bank is taking its toll on gold prices Thursday.
Although the COVID-19 pandemic continues to pose a significant risk to the European economy, ECB president Christine Lagarde, struck a relatively neutral tone during a press conference following the central bank's monetary policy decision.
Lagarde was fairly even-handed in her presentation as it has only been one month since the European Central Bank increased its spending program to support the regional economy as it continues to face the ongoing threat of the COVID-19 pandemic.
The gold market has seen some modest selling pressure during Lagarde's press conference. February gold futures last traded at $1,864.70 an ounce, down 0.30% on the day.
Lagarde said that the central bank will continue to maintain its ultra-loose monetary policy even as she expects the European economy to see the start of a recovery in the second half of 2021.
"Overall, the risks surrounding the euro area growth outlook remain tilted to the downside but less pronounced. The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging, but the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk," she said in her opening remarks.
The comments come as the ECB left interest rate on the main refinancing operations. The marginal lending facility's interest rates and the deposit facility remained unchanged at 0.00%, 0.25%, and -0.50%, respectively.
As risks remain, Lagarde reiterated the central bank's stance that its accommodative policies will remain in place for the foreseeable future.
"In this environment, ample monetary stimulus remains essential to preserve favorable financing conditions over the pandemic period for all sectors of the economy. By helping to reduce uncertainty and bolster confidence, this will encourage consumer spending and business investment, underpinning economic activity and safeguarding medium-term price stability," she said in her prepared remarks.
"We are prepared to adjust all instruments. Nothing is off the table," she added during the question and answer period of the press conference.