(Kitco News) – The gold market is holding steady above $1,700 but is seeing little reaction as the European Central Bank threw more stimulus into financial markets Thursday.
As expected, following its monetary policy meeting, the ECB announced that the interest rate on 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 -0.50% respectively.
However, in an effort to support the European economy, devastated by the COVID-19 pandemic, the ECB said that its pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion.
“In response to the pandemic-related downward revision to inflation over the projection horizon, the PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households,” the ECB said.
The timeline for the PEPP program will also be extended until at least June 2021.
Andrew Kenningham, chief Europe economist at Capital Economics said that the latest move by the ECB more than meets market expectations.
“It also does enough to justify the view that euro-zone policymakers have got their act together, for now at least, in responding to the coronavirus crisis,” he said.
Along with the emergency spending measures, the central bank said that its regular asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.
The ECB also reiterated that its asset purchase programme will run for as long as the committee deems necessary.
The gold market is not seeing much reaction to the new stimulus measures. August gold Futures last traded at $1,711.20 an ounce, up 0.38% on the day.
