By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, February 1, 2023
The U.S. Federal Reserve Chairman Jerome Powell, on February 1, 2023.
The Federal Reserve raised rates by 25 basis points, or 0.25 percentage point, as was widely expected. This is the eighth increase in a row less sharp than the previous ones. The Fed plans further increases, as the Chairman Jerome Powell noted in his speech that “inflation has slowed down a little but stays high“,
Wall Street will now look for clues on how much more the Fed will raise rates, especially as some economic data points to easing inflation. Chair Jerome Powell is slated to hold a news conference at 2:30 p.m. ET.
The hike brings the Fed’s target range to 4.5%-4.75%, the highest level since 2007.
“Recent indicators show moderate growth in spending and output ,” the Fed’s Monetary Policy Committee (FOMC) said in a statement after its first meeting of the year, which began on Tuesday. morning.
Language suggests Fed inclined toward quarter-point rate hikes at next two meetings in March and May, rather than toward a pause after March.
Fed says “inflation has eased somewhat but remains elevated” and removes prior references to causes of inflation including the pandemic; also omits a prior reference to considering “public health” as a factor in decision-making
The decision of the FOMC is unanimous.
Gold and silver prices are expected to rise in 2023 amid a weakening U.S. dollar and an expected easing of the Federal Reserve’s monetary policy by the end of 2023, after a campaign of eight rate hikes started in March 2022, which put the U.S. economy at risk of recession in 2023.
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Some traders expect gold price to rise to $1,950 an ounce in early 2023. The U.S. Federal Reserve will have no choice but to pivot and lower interest rates in 2023 (in Q2 or Q3), in order to reduce the impact of the coming recession.
Thus, we expect gold price to cross $2,000 in Q2 and $2,100 in Q3. Gold prices could hit $1,980 a troy ounce in early February if the U.S. Federal Reserve announce an interest rate rate hike of 0.25 percentage point today at its monetary policy meeting.
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© Copyright 2023 – Swann Collins, investor, writer and consultant in international affairs.