Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective.
In the context of US Fed rate Colin Shah, MD, Kama Jewelry said, Fed’s decision to keep the rates unchanged comes as per the industry expectations. With inflation moving towards the desired target of 2% as set by the US Central Bank, a possible rate cut hinted during September is expected to have a cooling effect on the gold prices.
However, the situation rests on which way the inflation trend lines is heading. The potential rate cut by the US Fed will go a long way in bringing back the sheen to the Indian jewellery exports.
Domestically, the gold prices witnessed a marginal upswing of ~1% in domestic market followed by Fed’s nod for a possible rate cut. The price of yellow metal is currently hovering at an attractive level post the announcement of customs duty cut in the union budget.
Consumers have already started making the most out of this period of attractive gold rates and with festive as well as wedding season in sight, the sentiment is leaning on the positive for this quarter.
