The International Monetary Fund warns about new rate hikes soon. Such an urge to tackle the inflation problem is partially connected with governments striving to restore their economies. Even when a policymaker like Jerome Powell of Fed announces a smooth transition, risky stocks are to fall dramatically. This confirms the general increase in gold demand we noticed yesterday — the investors are more and more into low-risk equities.
Speaking of Fed, yesterday it came up with a less aggressive solution than some have expected. The interest hike might take place in the middle of March. Markets, disturbed by the long wait, have reacted negatively: Nasdaq fell by 3.13%, Japanese Nikkei 225 decreased by 3.11%, and European STOXX 600 lost 0.78%.
“There’s a risk that the high inflation we’re seeing will be prolonged, there’s a risk that it will move even higher. We have to be in a position with our monetary policy to address all of those plausible outcomes,” — said Jerome Powell.
USD index increased 0.40% reacting to Fed’s monetary policy shifts together with a depressing trend in European markets. It has achieved the highest rate since mid-December. On the opposite, oil futures went down as the economy of the biggest oil user seems unstable.
The price of Brent crude is $88.46, WTI — $87.09, GBP/USD — 1.3421, EUR/USD — 1.1201, and gold costs $1813.65 per ounce.