They’re at it again. New York Fed president William Dudley said today, “Gradual path to rate hikes are appropriate. Although the downside risks have diminished since earlier this year, I still judge the balance of risks to my inflation
and growth outlooks to be tilted slightly to the downside.”
Janet Yellen also out there speaking to the media said, “The global economy has seen relatively weak growth despite positive signs in the U. S.” The FED has taken a cautious approach on raising interest rates this year after raising them in December, for the first time in nearly a decade. The bank’s policy committee projects two rate hikes this year.”
Yellen, under criticism that the December rate hike came under pressure from Wall Street and the media, defended that decision by saying, “I did not consider the December decision a mistake, as indications at the time showed substantial progress toward the FED’s labor market and inflation goals. Moving forward, the FED will watch very carefully what is happening in the economy.”
It seems to me that there is much disagreement among the ranks of the Federal board. Four of the 17 members now publicly indicated their disagreement with the dovish guidance stance that Janet Yellen is taking.
SO what does this all mean? Is Janet Yellen losing control of her staff and does the staff have any confidence she can lead?
In the end, with all the different opinions each of the FED governors have (and there are many) raising interest rates will be difficult, when parts of the world economies are in shambles and negative interest rates in the news every day. As they claim rate hikes will be data dependent, I expect the data
will justify staying right where we are because we all know the December rate hike WAS a mistake.
For the gold market there is nothing more important than having clarity on where interest rates will go. So in the meantime the price of gold just sits in a trading range and consolidates with hopes of building a strong foundation to support higher prices in the future.
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.