Fed Rate Rise Sees Gold Price Jump $10 as UK and ECB Hold Despite Rising Inflation

Gold prices rose further in London trade Thursday, gaining $20 per ounce from this week’s 5-month lows after the US Federal Reserve raised its key interest rate as expected.
After UK inflation came in at a 6-year high of 3.1%, the Bank of England today voted unanimously to hold its key interest rate at a near record-low of 0.5%.
With annual inflation in Germany reaching 1.8% in its strongest year since 2012, the European Central Bank then said it’s keeping deposit rates at minus 0.4% for commercial banks, while extending its new quantitative easing asset purchases at a monthly pace of 30 billion per month until at least September 2018.
“Economic conditions will evolve in a manner that will warrant gradual increases in [interest rates],” said the Federal Reserve on Wednesday, taking the overnight Fed Funds rate up a quarter-point to 1.50% at the last major meeting chaired by Janet Yellen before current governor Jerome Powell takes over in February.

This post was published at FinancialSense on 12/14/2017.

Renovating the Fed

Earnings don’t move the overall market; it’s the Federal Reserve Board…. Focus on the central banks and focus on the movement of liquidity…. Most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.
– Stan Druckenmiller (hat tip Steve Blumenthal)
The Federal Reserve will soon have a new chair, assuming the Senate confirms Jerome Powell as Janet Yellen’s successor. Yellen’s departure will reduce the nominally seven-member Board of Governors to only three. That may or may not be a good thing, depending on some other events.
In fact, in talking with some of my Fed-watching friends, it appears the world’s most important central bank is about to experience some potentially profound changes – not just in personnel but more importantly in the kind of people who lead it. Those changes could, in turn, have some serious economic impacts; so it’s worth taking a deeper look.
First, let me remind you that early bird rates will expire soon for my Strategic Investment Conference, next March 6 – 9 in San Diego. We’ve received a great response even without announcing all the speakers yet – and I do have some more big names pending. Several people you don’t want to miss are trying to clear their schedules. You can wait to find out who they are, or you can register now and save yourself a few hundred bucks. It should be an easy choice. Everyone who comes always says that my conference is the best. Click here to learn more.
Nonmusical Chairs
Before we get into the impending changes at the Fed, let’s quickly review how the organization works. For some of you this review will be too elementary, but even many sophisticated investment people really don’t have much understanding of the inner workings of the Fed.

This post was published at Mauldin Economics on DECEMBER 2, 2017.