The Federal Reserve is not expected to raise interest rates at this week’s meeting, and Powell’s hawkish and doveish tendencies will guide gold prices.
This week the Federal Reserve will hold its sixth Federal Open Market Committee (FOMC) meeting this year. The Federal Reserve holds FOMC meetings eight times a year, and at these meetings, Fed members discuss their economic forecasts and vote on any changes in monetary policy, such as raising or lowering interest rates.
Economists and the financial industry expect the Fed will not raise the benchmark federal funds rate at its second consecutive meeting. The Fed has raised interest rates at each consecutive meeting since the March 2022 meeting. At the time of the March 2022 meeting, they began an aggressive and restrictive round of tightening, raising interest rates from 0-0.25% to the current fixed rates of 5.25%-5.5%. This assumption can also be seen in CME Group’s FedWatch tool, which currently predicts a 97% chance of the Fed not raising rates this week.
The Fed’s major monetary policy changes are driven by data, with the Fed turning to data that needs confirmation that inflation is heading toward its 2% target. There remains some debate over whether the Fed will raise rates again before signaling an end to its restrictive rate hike cycle.
This means that market participants will be listening and looking for the Fed’s “tone” from this week’s FOMC statement, Chairman Powell’s press conference or comments from Fed members to indicate when they will end raising interest rates as a hint as to when next year will be. any information on when interest rate cuts will begin.
In an article, Deutsche Bank economist Matthew Luzzetti responded to this question, saying: “Given the more optimistic outlook, and the economic data since the June 13-14 meeting, which has been surprisingly upward, I think Fed policymakers may not raise rates further. They’re just not ready to say that. If they declare the end of the cycle from a tightening perspective, that could lead to a significant easing of financial conditions. I don’t think they want to do that.”
It is very likely that the Federal Reserve will not announce the end of interest rate hikes this week, so it will be the hawk-dove attitude of its statement that ignites the rise in gold prices or causes the price of gold to continue to fall, rather than the content of its statement. The price of gold hit $1,980 on September 1 and began to fall.
Spot gold daily chart
Spot gold was trading at $1,929.91 per ounce at 11:28 on September 18, Beijing time.
2023-09-18 03:31:00
#Fed #expected #raise #interest #rates #weeks #Federal #Reserve #meeting #Powells #hawkish #doveish #tendencies #guide #gold #price #trends #Provider #FX678
