The Federal Reserve’s next FOMC meeting is just under two weeks away, and market participants are gaining insight from Chairman Powell and other Federal Reserve voting members. Recent statements by Chairman Powell have indicated a major shift in his position regarding inflation. Up until his most recent statements, he maintained that inflation levels had peaked, were transitory, and would begin to decline. However, he has been forced to reevaluate those assumptions based on the reality that the CPI is currently at 8.5% for March, and the PCE index came in at 6.4% in February. PCE numbers for March will be released on April 29.
Statements by all members of the Federal Reserve have intrinsically contained subtle changes in words used to describe their forward guidance; this was not the case this week when Chairman Powell addressed the issue of inflation head-on.
For the first time, Powell was forced to acknowledge that “it is appropriate to be moving a little more quickly... Our goal is to use our tools to get demand and supply back in synch…and do so without a slowdown that amounts to a recession... It is going to be very challenging.”
During the March FOMC meeting, the Federal Reserve began its process of interest rate normalization or “lift-off” by raising the Fed Funds rate from virtually zero (0% to .25%) by .25% taking interest rates to 25 – 50 basis points.
The most recent inflationary data indicates that Americans are experiencing the highest inflationary pressure since January 1982, which makes it almost certain Continue reading "Gold Declines As Fed Prepares To Fight Inflation"