live gold price chart – the ECB held its December monetary policy meeting
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| live gold price chart – the ECB held its December monetary policy meeting |
live gold price chart – the ECB held its December monetary policy meeting
live gold price chart Last Thursday, the ECB held its December monetary policy meeting. The financial institution maintained its stance steady, keeping the interest rates unchanged. However, the ECB has revised slightly down the outlook for real GDP growth for 2020, while the outlook for HICP inflation went slightly up
But the most change occurred within the position of the President. Christine Lagarde has replaced Mario “whatever it takes” Draghi. Of course, it's happened a while ago, but only now she chaired her first monetary policy meeting and held a post-meeting news conference because of the ECB President. What do her remarks and her presidency generally imply for the ECB’s future and therefore the gold market specifically
live gold price chart, First of all, we are now sure that the dovish stance on monetary policy is going to be prolonged? Lagarde confirmed the established order on interest rates, quantitative easing, etc. She said that “All right, on the toolbox, I’m not getting to revisit the past (…) Policy decisions that were made, stand, and were re-endorsed once more
Moreover, Lagarde communicates with the market pretty much. She reminded the audience within the very beginning that every president has his or her own sort of communicating, therefore the analysts shouldn't overinterpret her words. She also nicely escaped from being compared with Draghi or being classifying as dove or hawk
Lagarde said that “I’m neither dove nor hawk and my ambition is to be this owl that's often related to a touch little bit of wisdom”. Nice rhetoric, Madame, but let’s be honest, we all know that at heart you're a dovelive gold price chart Indeed, Lagarde was rather candid on the negative interest rates. She didn't criticize them and she or he didn't announce any normalization. Instead, when asked about the existence of a “reversal rate”, i.e. a policy rate whose adverse consequences outweigh the positive effects, she replied that it’s not the case within the Eurozone. So, the madness of negative interest rates will continue. Is it really wise, Madame
live gold price chart Last but not least, Lagarde announced that a top-down review of the ECB’s strategy would get underway in January to be completed by the top of 2020? And guess what, she didn't say that, but I bet dollars to doughnuts that the review will involve a more symmetric inflation goal. As a reminder, the ECB aims to succeed in the rate of inflation at A level sufficiently on the brink of, but below, 2 percent. I can imagine that the phrase “but below” must be a thorn in Lagarde’s side. She already said during the news conference, that inflation at 1.7 percent isn't close enough
Implications for Gold
What does it all mean for the ECB’s monetary policy and therefore the gold market? Well, Lagarde is consensual. Lagarde speaks nicely
Lagarde smiles. But watch out for the central banker! Don’t be fooled by Madame Lagarde’s charm. If it's sort of a dove, flies sort of a dove, and coos sort of a dove, then it probably maybe a dove. And, indeed, Lagarde may be a dove, or actually an ultra dove. So, we expect the established order on the very easy ECB’s monetary policy to continue, a minimum of until the opposite members of the Governing Council express their objections
live gold price chart, Unfortunately, from the elemental point of view, Lagarde’s dovishness isn't helpful for the gold prices. Fundamentally, I mean the very fact that dovish ECB, or the ECB more dovish than the Fed, should work to weaken the euro against the U.S. dollar. and therefore the dollar’s strength should keep downward pressure on gold prices
But the most change occurred within the position of the President. Christine Lagarde has replaced Mario “whatever it takes” Draghi. Of course, it's happened a while ago, but only now she chaired her first monetary policy meeting and held a post-meeting news conference because of the ECB President. What do her remarks and her presidency generally imply for the ECB’s future and therefore the gold market specifically
live gold price chart, First of all, we are now sure that the dovish stance on monetary policy is going to be prolonged? Lagarde confirmed the established order on interest rates, quantitative easing, etc. She said that “All right, on the toolbox, I’m not getting to revisit the past (…) Policy decisions that were made, stand, and were re-endorsed once more
Moreover, Lagarde communicates with the market pretty much. She reminded the audience within the very beginning that every president has his or her own sort of communicating, therefore the analysts shouldn't overinterpret her words. She also nicely escaped from being compared with Draghi or being classifying as dove or hawk
Lagarde said that “I’m neither dove nor hawk and my ambition is to be this owl that's often related to a touch little bit of wisdom”. Nice rhetoric, Madame, but let’s be honest, we all know that at heart you're a dovelive gold price chart Indeed, Lagarde was rather candid on the negative interest rates. She didn't criticize them and she or he didn't announce any normalization. Instead, when asked about the existence of a “reversal rate”, i.e. a policy rate whose adverse consequences outweigh the positive effects, she replied that it’s not the case within the Eurozone. So, the madness of negative interest rates will continue. Is it really wise, Madame
live gold price chart Last but not least, Lagarde announced that a top-down review of the ECB’s strategy would get underway in January to be completed by the top of 2020? And guess what, she didn't say that, but I bet dollars to doughnuts that the review will involve a more symmetric inflation goal. As a reminder, the ECB aims to succeed in the rate of inflation at A level sufficiently on the brink of, but below, 2 percent. I can imagine that the phrase “but below” must be a thorn in Lagarde’s side. She already said during the news conference, that inflation at 1.7 percent isn't close enough
Implications for Gold
What does it all mean for the ECB’s monetary policy and therefore the gold market? Well, Lagarde is consensual. Lagarde speaks nicely
Lagarde smiles. But watch out for the central banker! Don’t be fooled by Madame Lagarde’s charm. If it's sort of a dove, flies sort of a dove, and coos sort of a dove, then it probably maybe a dove. And, indeed, Lagarde may be a dove, or actually an ultra dove. So, we expect the established order on the very easy ECB’s monetary policy to continue, a minimum of until the opposite members of the Governing Council express their objections
live gold price chart, Unfortunately, from the elemental point of view, Lagarde’s dovishness isn't helpful for the gold prices. Fundamentally, I mean the very fact that dovish ECB, or the ECB more dovish than the Fed, should work to weaken the euro against the U.S. dollar. and therefore the dollar’s strength should keep downward pressure on gold prices
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