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https://www.zerohedge.com/markets/feds-feckless-inflation-fight
The Fed is supposedly about to step into the ring to fight inflation. But all indications are it’s going to be a feckless fight.
Gold flirted with an all-time record high last week driven in part by safe-haven demand due to the geopolitical uncertainty caused by Russia’s invasion of Ukraine. But as the war drags on and the panic subsides, that safe-haven bid seems to be unwinding.
Now investors have turned their attention back to the Fed. When the war broke out, people thought it could slow the central bank’s monetary tightening plans. But with a 7.9% CPI print for February, the mainstream is back on the tightening bandwagon. They’re betting the central bank is going to tighten fast and hard, and they’re selling gold on the expectation of higher interest rates
But even if the Fed does what the market is betting it will do, it’s not going to put a dent in inflation, and interest rates will not rise high enough to undermine gold.
According to a Reuters article:
A key money market indicator is now pricing US interest rates peaking at a higher level than previously forecast, as traders bet that the Federal Reserve will prioritize stamping out inflation over fretting about risks to economic growth.”
And just how high are they betting interest rates will rise?
2.5%
The Fed is supposedly about to step into the ring to fight inflation. But all indications are it’s going to be a feckless fight.
Gold flirted with an all-time record high last week driven in part by safe-haven demand due to the geopolitical uncertainty caused by Russia’s invasion of Ukraine. But as the war drags on and the panic subsides, that safe-haven bid seems to be unwinding.
Now investors have turned their attention back to the Fed. When the war broke out, people thought it could slow the central bank’s monetary tightening plans. But with a 7.9% CPI print for February, the mainstream is back on the tightening bandwagon. They’re betting the central bank is going to tighten fast and hard, and they’re selling gold on the expectation of higher interest rates
But even if the Fed does what the market is betting it will do, it’s not going to put a dent in inflation, and interest rates will not rise high enough to undermine gold.
According to a Reuters article:
A key money market indicator is now pricing US interest rates peaking at a higher level than previously forecast, as traders bet that the Federal Reserve will prioritize stamping out inflation over fretting about risks to economic growth.”
And just how high are they betting interest rates will rise?
2.5%
