ECB Leaves Interest Rates Unchanged; Gold Price Reaction Muted

March 8, 2018

London (Mar 8)  Gold moved little after the European Central Bank left interest rates unchanged Thursday and said it was continuing its asset-purchase program.

The Governing Council left the interest rate on the main refinancing operations and rates on the marginal lending facility and the deposit facility at 0.0%, 0.25% and minus 0.40%, respectively.

“The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” said a prepared statement from the ECB.

As of 7:50 a.m. EST, Comex April gold was trading down $1.10 to $1,326.50 an ounce. The metal was at $1,325.30 a minute prior to the ECB announcement.

Markets were watching to see if policymakers would take tentative steps toward starting to exit from their 2.55 trillion-euro asset-purchase program referred to as quantitative easing.

The Governing Council “confirms that the net asset purchases, at the current monthly pace of €30 billion, are intended to run until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim,” the ECB statement said.

“The Eurosystem will reinvest the principal payments from maturing securities purchased under the asset purchase program for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary. This will contribute both to favorable liquidity conditions and to an appropriate monetary policy stance.”

ECB President Mario Draghi is scheduled to hold a news conference later this morning.


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