Only the facts
CPI increased by 1% from month to month (MoM) Inflationary pressures increased in both the CPI and the core of the CPI Core CPI increased by 0.6% taking the annual inflation rate to 6% CPI increased to 8.6% on an annual basis, the highest annual profit since December 1981 The biggest increases in CPI were the cost of food, energy and housing
Forecasts differed from economists polled by Bloomberg, Reuters and the Wall Street Journal. Economists polled by the Wall Street Journal predicted that the CPI would rise to 8.3%, rising by 0.7% MoM. Economists polled by Reuters also predicted that the CPI would increase by 0.7% MoM. Economists polled by Bloomberg News said the CPI would reveal that inflation is being monitored at about the same monthly rate and that the chances of higher inflation on an annual basis were high.
Economists from all three poles were wrong. Economists polled by Bloomberg, Reuters and the Wall Street Journal all underestimated the rise in inflationary pressures on the MoM. The biggest contributor to this significant rise in inflationary pressures is energy costs, which rose 34.6%. However, almost all ingredients recorded record increases, including food costs which increased by an average of 10.1%. Housing costs increased by 5.5% and merchandise as a whole increased by 8.5% on an annual basis. What does this mean for consumers? more difficulties ahead Given that average hourly wages have fallen by 3% in the last year and the cost of the goods and services they need has risen dramatically equates to more hardship for lower- and middle-class Americans. This also means that newly acquired debt (mortgages, new car loans, etc.) will not only be more difficult to qualify for and will be more expensive to service. Existing balances will also be affected dramatically. Variable rate credit cards will increase, making existing balances more expensive to service.
How the current CPI will affect the future direction of the Federal Reserve The Federal Reserve will hold its FOMC meeting in June on Tuesday next week and will conclude on Wednesday. While a minority of economists expect interest rates to rise by 75 basis points (3/4%), the chances of the Fed becoming more aggressive in the magnitude of monthly interest rate hikes are extremely slim. The Federal Reserve’s most likely future guidance is to continue raising interest rates by 50 basis points after the rest of the FOMC meetings this year. The question is how many interest rate hikes by 50 basis points will the Fed implement and what will be the Fed’s interest rate by the end of the year? A train ride for gold traders Traders and investors experienced another wild trading session that can be better characterized by its extreme instability. The chart above is a 10 minute chart with candlesticks with gold futures contracts. At 8:30 a.m. EDT Gold futures opened at $ 1850 at 8:40 am. EDT was trading at a low of $ 1826.50. As of 4:40 p.m., EDT gold futures are up to $ 22.70 or 1.23% and are stabilizing at $ 1875.60.
As we have seen for many months, our belief is that inflationary pressures have not peaked and will in fact continue to rise as long as the underlying cause remains persistent. We are of the opinion that the current future guidance of the Federal Reserve will not reduce inflationary pressures. At best, higher interest rates will shrink the economy to such an extent that it will lead to a recession. At worst, their actions will be detrimental by fueling inflationary pressures higher. The current level of inflation and the current future guidance of the Federal Bank will strongly support the gold prices that will raise them over the next two years. For those who want more information just use this link. I wish you as always good transactions,
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided. However, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is for informational purposes only. It is not an incentive for any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept liability for losses and / or damages resulting from the use of this publication.
