Federal Reserve officials are far from calm ahead of the 10-day blackout period that comes just before an FOMC meeting. The first FOMC meeting of the year begins on Tuesday, January 31st and ends on Wednesday, February 1st. While some Federal Reserve officials have ranted that the Federal Reserve should raise interest rates by more than 25 basis points, that is exactly what is expected to happen at the end of the February 1st FOMC meeting.
The Federal Reserve is widely expected to slow the pace of rate hikes with another 25bps rate hike. According to the CME’s FedWatch tool, there is a 99.2% chance that the Federal Reserve will hike rates by 25 basis points at its next meeting. However, Federal Reserve officials have not come to a unanimous decision on the pace of rate hikes. While most Fed officials seem to agree on Chair Powell’s framework, others believe more hawkish policy is needed.
Members including Cleveland Fed Chair Loretta Mester and James Bullard remain in favor of a stronger rate hike, with others said to support rate hikes at a slower pace. Both Lorie Logan and Patrick Harker advocate slowing rate hikes. New York Fed President John Williams said that “monetary policy has more work to do” to bring inflation back to 2%.
According to a Portal News poll, 80% of forecasters participating in the poll (68 out of 83) believe the Federal Reserve will hike rates by 25 basis points at the next two FOMC meetings and then likely hold rates if inflation falls further Interest rates stable at least for the rest of the year.
This sentiment that the Fed will now slow the pace of rate hikes continues to fuel bullish market sentiment for gold and silver. Today, gold futures posted modest gains with the February futures contract currently fixed at $1928.70 after factoring in a $4.60 gain. The most active silver futures contract from March is up 0.86% and is currently fixed at $24.075.
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