Upcoming Presidential Elections Will Not Affect U.S. Interest Rates:
On Wednesday, U.S. Federal Reserve Chair Jerome Powell confirmed that the upcoming U.S. presidential elections will not influence the bank’s decisions regarding interest rates. Powell pointed out that policymakers are unanimous in keeping political factors out of the decision-making process, emphasizing that the bank’s decisions are driven by “what we believe is the right choice for the economy.” With this, Powell reasserts the bank’s consistent stance of disregarding politics in its economic analysis and decision-making process.
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Interest Rates
U.S. Interest Rates Remain Unchanged:
The U.S. Federal Reserve kept the overnight interest rates unchanged on Wednesday, within the range of 5.25-5.50 percent. The bank indicated that it still leans towards eventually lowering borrowing costs, but recent high inflation readings currently prevent this and suggest a possible pause in moving towards further economic balance.
Federal Reserve Chair Jerome Powell stated that it is likely to take longer than previously expected for U.S. central bank officials to gain “a greater degree of confidence” to begin reducing interest rates.
Powell added during a press conference after the two-day Federal Open Market Committee monetary policy meeting, “Inflation is still too high… Any further progress in curbing inflation is not assured, and the path ahead is murky.”
He continued, “Gaining greater confidence is likely to take longer than previously expected.”
Market Reaction
How the Market Reacted to the Fed’s News:
Spot gold prices saw an increase of more than 1.5% amid statements by the U.S. Federal Reserve Chair.
The price of gold futures rose by 1.25% to $2331.75 per ounce.
Silver prices also increased by 1.53% to $27.065 per ounce. Meanwhile,
the Dollar Index fell by 0.29% to 105.795 against a basket of foreign currencies.
Treasury bond yields experienced a sharp decline following the Fed’s decision to slow the pace of asset purchase reductions.
Two-year Treasury yields dropped by 1.83% to 4.954%,
and ten-year Treasury yields also decreased by 1.34% to 4.624%.
All Wall Street indices are currently on the rise,
with the Dow Jones Industrial Average increasing by 1.23% to 38,281 points,
Nasdaq by 1.44%, and the S&P 500 by 0.84%.
Bitcoin minimized its losses and rose above the $58,000 level,
currently trading at $58,388.5, while Ethereum rebounded and is now trading at $2966.
Upcoming Presidential Elections Will Not Affect U.S. Interest Rates