The ECB May Not Be Far Away From Further Easing.

The Bank of England has just announced a 0.25% interest rate cut, which immediately caused market turmoil, and the pound plunged more than 1% against the US dollar, reaching 1.3169. Risk aversion promoted gold's short-term rise. Last night, gold was down by the US's non farm payrolls data. The Bank of England lowered its benchmark interest rate to a new low on Thursday and said it would buy government and corporate bonds as part of the package of stimulus measures taken after the referendum in Britain was removed from Europe.

The Bank of England cut its main interest rate from 0.5% to 0.25%, the first rate cut since March 2009 and the lowest interest rate in the UK. In addition, the Bank of England has announced a package of measures to provide additional stimulus to economic growth. It includes the introduction of a new stage financing plan to strengthen the transmission of interest rate effect; purchase of British corporate bonds with an upper limit of 10 billion; an increase of 60 billion pounds of British Treasury bonds, expanding the financial assets purchase plan to 435 billion pounds.

Market analysis, UK economic data Poor performance is the main driver of this rate cut. The British referendum decided to withdraw from the EU at the end of June. In July, the UK manufacturing PMI was 48.2%, the service industry PMI was 47.4%, and both were below the ups and downs line, 4.2 and 4.9 percentage points lower than the previous month, and the consumer confidence index slipped directly to -12. This may indicate that the adverse effects of Britain's departure from Europe are beginning to show.

The pound cut interest rates and made the market react fiercely. Overnight, the pound fell 1.55% to 1.3119 against the dollar, the biggest decline since July 15th, and the US dollar index rose 0.27% to 95.75, of which the emerging market currencies were the largest against the US dollar. It helped the Bank of England cut its interest rate for the first time in 2009, and gold rose from 10 to 1362.74 dollars in short term. Gold in pound sterling rose by nearly 2%. Last night, the US dollar surged and the gold fell to 1346 dollars, due to the expected effect of us non farm employment data.

Despite the short-term adjustment, international investment banks and research opportunities have been optimistic about the performance of the gold market. This year, affected by the geopolitical situation and Britain's departure from Europe, market risk aversion is heating up. International gold price Rising. According to last year's last trading day of 1061.08 US dollars / ounce, the current international spot gold price has risen by nearly 30%.

On the first two days of the Bank of England interest conference, the Australian central bank also lowered interest rates by 25 basis points to 1.5% on the 2 day, a record low. The Australian central bank governor said Low inflation It is a factor pushing the Bank of Australia to cut interest rates. It is expected that inflation will remain low in Australia for some time to come.

Last week, the BoJ stepped up its monetary easing policy and announced that it would expand the volume of trading open-end index funds from 3 trillion and 300 billion yen (US $31 billion 700 million) to 6 trillion yen per year to resist deflation and stimulate economic growth.

South Korea and Russia have also cut interest rates recently. South Korea launched its first rate cut in June, lowering its benchmark interest rate by 0.25 percentage points to 1.25%, a record low. Russia's central bank also lowered its benchmark interest rate by 50 basis points to 10.5% for the first time in nearly 11 months in early June, and the interest rate remained at that level in July.

Although the European Central Bank is still in wait-and-see mode, it may not be far away from further easing. The Fed's interest rate raising plan, which has been attracting global attention, has also failed many times. However, this non-agricultural employment data may give rise to the expected interest rate rise.