After weeks of anticipation and a nine-page speech by Federal Reserve Chair Janet Yellen, gold traders are signaling they have no clearer picture of when US interest rates will rise.
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The Fed’s next meeting will be held on September 20-21.
Yellen is offering a generally upbeat assessment of the economy in a speech to a conference of central bankers in Jackson Hole, Wyoming.
The Fed raised rates in December, its first hike in almost a decade, but it has held off further increases so far this year due to a global growth slowdown, financial market volatility and generally tepid US inflation data.
That raised expectations for an increase in the benchmark federal funds rate before the end of the year, and as early as the Fed’s next policy meeting in September.
USA stocks slumped slightly in late-morning trading Friday after Federal Reserve Chair Janet Yellen signaled the possibility of an interest-rate increase later this year.
The materials group, which includes precious and base metals, miners and fertilizer companies, added 2.2 percent, while energy stocks advanced 1.2 percent as a lower USA dollar also helped support energy prices.
Yellen said the Fed anticipates “inflation rising to 2 percent over the next few years”.
The Fed chair, however, added that FOMC decisions would always depend on incoming data and hence its perception of increasing rates could change in the future. Yellen also noted that while inflation is still running below the Fed’s 2 percent target, it is being depressed mainly by temporary factors.
“That’s fine with me, because I think we should all be very happy if the world begins to slowly wean itself off the low-interest rate life support, and move back toward normality”, Lister said.
Fischer said on CNBC TV that the Fed was still on track to raise rates this year.
U.S. GDP expanded at a 1.1 percent annual rate, the Commerce Department said, down slightly from the 1.2 percent rate reported last month.
Crude oil prices increased as Yellen’s speech began.
The Commerce Department released a report before the start of trading showing a slight downward revision to the pace of USA economic growth in the second quarter.
“As ever”, she said, “the economic outlook is uncertain, and so monetary policy is not on a preset course”.
The Fed raised rates in December for the first time in almost a decade and projected another four hikes in 2016, only to scale that back to two moves in the wake of a global growth slowdown, financial market volatility and slow progress in meeting its 2 per cent inflation goal.
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Thereafter, he added her views “didn’t necessarily offer much in the way of surprises but it did confirm one thing – there is now a clear and public hawkish consensus building within the Fed and Chair Yellen is on board” with regard to guidance on monetary policy.
