Despite expectations for another rate cut, the European Central Bank left again the basic interest rate at 1.00% for the second consecutive month; the last time ECB had reduced the rate was back in December by 0.25 percent points. In the press conference President of ECB, Mario Draghi offered a bleak outlook for the EU economy in 2012.
Mario Draghi and the rest of European Central Bank council convened today in Frankfurt and decided to leave the Euro Area interest unchanged at 1.00%.
Mario Draghi stated in the press conference stated the economic outlook of the EU doesn’t look well in terms of low growth rate in the GDP, higher inflation than target, a further weakening of monetary dynamics and so forth.
The Euro Area flash report of the December inflation showed a decrease to 2.8% inflation in annual terms, which is still higher than the 2% inflation target of ECB.
The chart below percents the development of the CPI of EU and interest rates of ECB during 2011-2012.
Currently, this news seems to have a positive affect on the direction of commodities and forex prices as the Euro is traded up against the U.S. dollar and major commodities prices are increasing. This might be due to the expectations by many for a rate reduction that didn’t happen.
Euros to USD is currently traded at 1.3288 a 0.2047% increase as of 15:37*.
Current gold price, short term futures (March 2012 delivery) is traded at $1,748.3 per t oz. a $17 increase as of 15:26*.
Current silver price, short term futures (March 2012 delivery) is traded at $34.075 per t oz. a 1.1% increase as of 15:26*.
Current Nymex crude oil price, short term futures (March 2012 delivery) is traded up by 1.42%, at $100.11 per barrel as of 15:33*.
(* GMT)
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