Equity prices are on the rise and so is the price of Gold after Fed chairman Jerome Powell said the Central Bank has no intention of accelerating the pace of rate hikes.
He went on to say, that the Central Bank’s gradual path of interest-rate hikes remains appropriate as there does not seem to be “an elevated risk of overheating.”
As investors and traders listened to his comments at the Jackson Hole summer retreat, Powell said inflation has recently moved up near 2% but “we have seen no clear sign of an acceleration” above that level.
“My colleagues and I believe that this gradual process of normalization remains appropriate.”
Economists define a “gradual” pace as one quarter-point interest rate hike per quarter. The Fed has penciled in two more rate hikes this year. According to the CME FED Watch tool investors see a 90% chance of a move in September and a 60% probability of a rate hike in December. At the same time, the Fed intends to allow its balance sheet to shrink.
This news has given the investors and traders holding short positions a reason to head for the exits.
Enjoy the rest of your day.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.