FOMC, BoE, and ECB Set Interest Rate Paths for 2023: Gold Reacts Bullishly

This week, the FOMC, BoE, and ECB all met at their respective interest rate decision meetings, with the FOMC opting to downshift to a 0.25% hike and the BoE and ECB opting to raise rates by the expected amount, 50bps each.[0] The Fed’s first meeting of 2023, which begins today, is widely expected to result in a rate hike of 25bps, and Fed Chair Jerome Powell is expected to signal that the terminal rate remains at 5.25%. The BoE changed its statement to say that “if” there are more price pressures, “then” further tightening will be required.[0] The European Central Bank (ECB) pledged to raise interest rates by an additional 50 basis points in March and stated that future interest rate decisions will be made on a meeting-by-meeting basis.[1]

Gold saw strong support around $1,900 on Tuesday, and although it has seen some profit-taking in recent days, it rebounded strongly today, suggesting a bullish signal.[2] Yesterday, the European rates markets were taken aback by a quicker-than-anticipated uptick in Spanish inflation, bolstering the notion of the European Central Bank (ECB) increasing rates by 50 basis points multiple times.[3] We suspect much of this inflation story has now been priced in and a still quite hawkish pricing for European Central Bank tightening (150bp of hikes by June) suggests the room for further increases in rate expectations has shrunk for now.[4]

We estimate that the UK will narrowly avoid a technical recession in the fourth quarter of 2022, thanks to the bump in activity in September.[5] The Riksbank of Sweden is likely to increase their rate by 50 basis points this coming Thursday, as a result of continuous core inflation and increases in salary growth.[5] Market eyes will be on the US however, as Jerome Powell is scheduled to speak at the Economic Club of Washington on Tuesday. In his post-FOMC press briefing, Powell refrained from challenging market predictions of a slower rate of increase, so any comments concerning inflation and interest rate expectations will be essential for the U.S. dollar.[6]

0. “Week Ahead: Continued NFP and Central Bank Fallout, RBA, and Earnings” Action Forex, 3 Feb. 2023,

1. “FX Majors Weekly Outlook (30-03 February)” ForexLive, 30 Jan. 2023,

2. “A Huge Few Days Aahead” Action Forex, 31 Jan. 2023,

3. “FX Daily: Bracing for volatility” ING Think, 31 Jan. 2023,

4. “FX Daily: Peak? What peak?” ING Think, 1 Feb. 2023,

5. “Key Events In Developed Markets Next Week” MENAFN.COM, 3 Feb. 2023,

6. “Week Ahead – RBA Next to Hike, UK Might Avoid a Recession (For Now)” Action Forex, 3 Feb. 2023,