Now that the jobs report has come and gone, market participants are awaiting two extremely important events that will take place today and Thursday. Today at 9:00 a.m. EST, Federal Reserve Chairman Jerome Powell addressed a central bank conference in Riksbank, Sweden. On Thursday, the BLS (US Bureau of Labor Statistics) will then publish the CPI report for December. Together these two events will shape the forward direction of financial markets including precious metals.
The chairman said today that the Federal Reserve may have to make unpopular decisions to stabilize prices. Speaking at the central bank conference, he underscored that it was politically unpopular to take the tough decisions needed to stabilize prices and inflation.
He addressed the need for the Federal Reserve not to be pressured by political influence while addressing and solving the persistently high inflation that currently exists.
“Price stability is the bedrock of a healthy economy and offers immeasurable benefits to the public over time. But restoring price stability when inflation is high may require measures that are not popular in the short term as we raise interest rates to slow the economy.” He added: “The lack of direct political control over our decisions allows us to to take necessary measures without considering short-term political factors.”
He purposely omitted any mention that would provide direct clues as to where Federal Reserve monetary policy is headed. He also failed to mention the rationale for last year’s actions, which included raising interest rates during seven FOMC meetings, bringing the Fed’s benchmark interest rate to 4.25%. A full transcript of today’s speech can be found at the link below.
On Thursday, the BLS will release its latest inflation data versus CPI for December. December inflation is expected to ease to 6.5% from a peak of 9.1% in June, according to the Federal Reserve of New York.
According to PYMNTS.com, “The Center for Microeconomic Data of the Federal Reserve Bank of New York said in a press release: “One-year forward average inflation expectations declined further in December, falling 0.2 percentage point to 5.0% at its lowest since July 2021. In contrast, three-year inflation expectations remained unchanged at 3.0% in December.”
Chairman Powell’s speech today in conjunction with Wednesday’s CPI report will represent important fundamental events and could have profound implications for gold and silver prices.
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