Recent statements by Federal Reserve members have maintained its hawkish stance and emphasized the need to continue raising interest rates. At a Friday conference in San Antonio, Texas, Federal Reserve Board Governor Christopher Waller said during his speech that inflation is much higher than the target level, and the labor market remains quite tight and strong, so monetary policy needs to be tightened even more.
According to Governor Waller, the latest March report on the consumer price index is mixed news, showing that the Fed has not made much progress in achieving its inflation target. A 0.4% increase in core consumer prices and higher for four consecutive months is evidence that the Federal Reserve should continue its aggressive stance on raising rates.
Many economists are convinced that inflation is nowhere near the Federal Reserve's 2% target.
According to economist Mohamed El-Erian, the fact that inflation in the U.S. cannot approach the Federal Reserve's 2% target is supported by March inflation data.
Also, these opinions and figures are consistent with those of the CME FedWatch tool, which determined that there is an 86.7% chance that the Federal Reserve will make another rate hike by a quarter point. As a result, the final base rate will be from 5% to 5.25%.
Persistently high inflation will continue to provide strong support for precious metals.
However, if interest rates are aggressively raised again, the dollar's current weakness will remain in question, as changing interest rates push bond yields higher and support the U.S. dollar.