There is definitely a conundrum when it comes to the Federal Reserve’s handling of current inflationary rates. The Fed made it clear that they would continue to let inflation run hot compared to their previous monetary mandate. Whether current inflation levels are temporary or sustained will determine when and how much the Federal Reserve raises rates.
Last week’s announcement by the Federal Reserve that they have penciled in two interest rate hikes in 2023, and they are now talking about a timeline to taper their asset purchases sent the equities and precious metals markets into a meltdown last week.
However, today we witnessed a 180° reversal in both equities and precious metals, resulting in both financial markets yielding strong gains. The Dow Jones Industrial Average gained 586 points (+1.76%) today, and the precious metals across the board had a strong upside bounce. Today’s reversal in the markets is partially due to statements made by two Federal Reserve members, Dallas President Robert Kaplan and St. Louis Federal Reserve President James Bullard.