US Fed raise the funds rate to 5.50%

Jul 27, 2023

1 23Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy.

In the row Colin Shah suggest on Gold price outlook post-Fed rate hike. He said, “The US Fed hiking rates by 25 bps were on expected lines, the street is expecting one more hike from here on. As inflation is showing signs of control an impending fear of recession will limit Fed’s ability to hike rates further.

We may expect an easing of policy rates by next year. The expectation of policy easing has led to a fall in the dollar index and thereby strength to the yellow metal. The rally in the past couple of days is expected to continue albeit at a slower pace.

Globally, the prices are expected to touch the $2000/oz level. Domestically, the rate may touch its previous high of over 62,000/10gm. The movement of the yellow metal will largely be guided by the economic data in the west, and the magnitude of the recession in the US.”

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