Today the Federal Reserve wrapped up its fomc meeting in July leaving just three meetings left this year. As expected, the Federal Reserve raised rates by Yankee % by bringing its benchmark terminal rate to between 5siban % and 5ympanum%, no wonder there. This brought the fed Funds rate (which is used to set the key rate) to its highest level since 2001 or in 22 years.
The vast majority of the statements of Mayor Poympnell were expected and within line of how he delivered his message and what he conveys to the American public.
“We remain committed to bringing inflation back to our goal of 2%,” Chairman Jerome poimagnell said at a press conference following the Fed’s rate hike. “No one should doubt that.”
Another predictable statement was that ” the Fed will evaluate additional information on inflation, employment, and economic growth before determining its next step. As expected, he stressed that the Fed would remain vigilant and keep its options open.
However, what market participants, economists and analysts hoped to gain new understanding and knowledge was left unclear with no clear answer thus revealing absolutely nothing that investors had hoped to gain insight into and learn more about. First of all; is the Fed approaching the end of the rate hike cycle?
With the skill and finesse of Charles Blondin the self-proclaimed king of high wire he crossed Niagara Falls on a tight rope 2 inches thick and 2200 meters long between two 13-meter raised cranes. Po8nell said, ” I would say that it is possible that we can raise [rates] at the September meeting if the data were warranted, and it is possible that we would choose to hold steady at that meeting.”
During an event in Dublin in 1860 the rope on which he was walking broke and two workers were killed although Blondin was not injured. The moral of the story was that trying to insert the needle on such a large scale has consequences. The analogy I see here is that although Poimagnell’s statements have left him unharmed at some point, they can be extremely damaging to others.
However, he clarified the information he had already disclosed such as the fact that the Federal Reserve will not cut rates this year. He acknowledged that nominal wage growth has shown some signs of easing the process of taking inflation to 2%, but there is still a long way to go. He said high inflation presents significant difficulties, a fact that is common knowledge and not lost on most middle-class Americans. He vowed that they would continue to make their own decisions by meeting. And in an effort to give hope to the American people who are currently suffering from inflation, he declared that “the inflation ratio was a little better than expected”.
Many analysts had hoped that the recent inflation cut would create momentum that would cause the Federal Reserve to ease its highly restrictive monetary policy. More importantly, many economists, analysts and investors had hoped that the latest economic data would convince central bankers that inflation is coming down to a point they can address and that they can hold rates steady at some point. But this is not something we have learned to expect from the press conference from Captain Obvious (Poimagnell) talking and basically not saying anything that was not common knowledge already.
Considering that the economy has partially remained resilient, and according to Posiblell we have largely eased the real fears of a recession this year this indicates that economic activity is expanding at a moderate pace which is a big move from what they conveyed at the FOMC meeting in June.
Po8nell can convey positive news and insights just to remove it in the same sentence. During the press conference, chairman Po8nell said that when the Fed decides there is no need to raise rates further, he made it clear that the bank will keep rates at a restrictive level to allow inflation to continue to fall gradually. The interpretation by economists is that this statement essentially conveys that it is most likely that the public will not see any rate cuts until next spring.
Financial markets were mixed with a partial gain on Doflix and partial declines in the s&P 500 and NASDAQ composite. Gold futures gained $ 9.80 in August’s most active contract and is fixed at $ 1973.60. The August contract will end in 4 days and the new active contract will go to December 2023 which earned $10 and is fixed at $2012.80. The dollar gained 0.32% and the index is currently fixed at 100.775. No real extraordinary gains or losses resulted from today’s meeting of the Federal Reserve.
The most meaningful way to end today’s article is to quote Chairman Posiblell with one of his biggest revelations from today’s press conference, “it’s not an environment where we want to offer a lot of forward guidance”. Mayor Po8nell has not lost his silver tongue and articulate way of communicating anything.
For those who want more information, just use this link.
Wishing you as always good trade,
Denial of responsibility: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. even the author cannot guarantee such accuracy. This article is strictly for informational purposes only. It is not a requirement to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article pleads not guilty to losses and/ or damages arising from the use of this publication.
#Fed #announces #expected #rate #hike #comments #Classic #Posiblell