Central Banks Likely to Persist with Dovish Policy Stance
Gold is consolidating the gains secured on Friday. The yellow metal surged to new six-week highs late last week in thin holiday trading. Risk appetite seems to have returned, amid mounting expectations that global central banks will persist with their uber-accommodative policy stances.
The BoJ in particular is under increasing political pressure to expand their quantitative measures ahead of December elections. All of this accommodative talk has taken the safe-haven bid out of the yen in recent months, driving gold within 3% of its all-time high against the yen.
Surprisingly, the BoE just named Bank of
Everyone seems to love Carney because of the perception that
Nonetheless, like most of his counterparts, Carney dramatically slashed the central bank's benchmark overnight rate by 425 bps, from 4.5% to 0.25% in reaction to the crisis. And while the BoC has since raised the O/N rate target to 1.0%, and made noises about further tightening next year, he can hardly be considered a monetary hawk.
I wouldn't expect any great changes in policy at the BoE upon King's exit and the market seems to agree at this point. Sterling has been largely nonplussed by the surprise and gold in terms of the British Pound remains well bid near 7-week highs and less than 10% off its all-time high at ￡1194.68.