X
GoldRepublic
View

Draghi Makes U-Turn in Monetary Policy; Euro Drops

President of the European Central Bank (ECB), Mario Draghi, stunned financial markets last week by announcing a U-turn in the Eurozone’s monetary policy. Instead of a long-awaited rate hike, Mario Draghi announced on the contrary a new monetary stimulus package. The Italian, among other things, pulled an old trick out of the ECB sleeve (the so-called TLTROs), mere months after the European version of quantitative easing was brought to a complete stop.

But it should be very clear to close observers what really is happening: Mario Draghi will step down in October this year and wishes to avoid a renewed recession and/or financial panic at practically all cost during his term. And since the ECB lowered its economic forecast for 2019 from 1.9% GDP growth to a mere 1.1% growth, it seems that the odds of a European recession in the short run are on the rise.

As a result, the euro weakened against the dollar (EURUSD at 1.12), the rate on German bonds fell sharply and gold prices barely moved. Gold prices, however, already fell below $1,300 dollars per troy ounce earlier this month.

Draghi Caused an Unintended Effect

ECB Brings TLTRO Back to Life

Beware of Italy

Newsletter

Sign up for our periodical newsletter to stay informed about the gold and silver markets and special offers.

AFM

GoldRepublic operates under license from the Dutch Authority for the Financial Markets (AFM),
Registration Number 12020650