During his confirmation hearing on Wednesday, Fed Chairman Jerome Powell announced that inflation was a “severe threat” to our nation’s full economic recovery. He said the central bank is preparing to raise interest rates because the economy no longer needs emergency support. In addition to those hikes, the Fed will also taper its monthly bond purchases, which have added more than $4.5 trillion to its balance sheet since the beginning of the pandemic. Kitco News reports Powell’s testimony is giving hope to gold investors, who are now keeping a closer eye on what the first quarter of 2022 does for the precious metal. Powell isn’t the only one worried about high inflation. A recent study by Allianz Life, one-quarter of Americans now view rising inflation as the single greatest risk to their retirement plans.

 

CNBC/Jeff Cox
Fed Chair Powell says rate hikes, tighter policy will be needed to control inflation

Federal Reserve Chairman Jerome Powell, with a seemingly clear path to a second term heading the central bank, declared Tuesday that the U.S. economy is both healthy enough and in need of tighter monetary policy.

As part of his confirmation hearing before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Powell said he expects a series of interest rate hikes this year, along with other reductions in the extraordinary help the Fed has been providing during the pandemic era.

“As we move through this year … if things develop as expected, we’ll be normalizing policy, meaning we’re going to end our asset purchases in March, meaning we’ll be raising rates over the course of the year,” he told committee members. “At some point perhaps later this year we will start to allow the balance sheet to run off, and that’s just the road to normalizing policy.”

You can read the entire article, here.

 

Kitco News/Anna Golubova
Fed’s Powell gives hope to gold bulls in Q1 2022, watch the $1,830 level – Pepperstone

There is optimism in the gold space after Federal Reserve Chair Jerome Powell’s nomination testimony triggered a price rally, according to Pepperstone.

The key level to watch now is the $1,830 an ounce, with gold bulls now hopeful of what the first quarter could bring for the precious metal.

Gold climbed to new daily highs as Powell testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs. At the time of writing, February Comex gold futures were trading at $1,821.20, up 1.25% on the day.

Even though Powell sounded as hawkish as before, markets got a glimpse of how flexible the Fed is when tightening monetary policy going forward.

“While Powell didn’t really push back on market pricing around expected Fed rate hikes, we’ve certainly seen relief play out across markets,” said Pepperstone’s head of research Chris Weston. “It feels as though he confirmed this idea that when it comes to dealing with price pressures, the Fed have afforded themselves maximum flexibility and optionality to deal with changing dynamics, yet tried to remove a belief that they are stuck on a set path.”

Read the full story, here.

 

Allianz Life Insurance Company of North America
Rising Inflation seen as Biggest Risk to Americans’ Retirement Plans in 2022

Although Americans say they worried most about the COVID-19 pandemic in 2021, rising inflation is now seen as the biggest risk to their retirement plans, according to the annual New Year’s Resolutions Study* conducted by Allianz Life Insurance Company of North America (Allianz Life). Nearly half (48%) of respondents identified the pandemic as the most worrisome threat of 2021, with the rising cost of living following at 38%. However, looking ahead, a full one-quarter of Americans now view rising inflation as the single greatest risk to their retirement plans, more than doubling from 2020 (8%).

You can read the full story, here.

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