{"id":458,"date":"2023-02-05T18:02:28","date_gmt":"2023-02-05T23:02:28","guid":{"rendered":"https:\/\/embarrdowns.com\/fomc-boe-and-ecb-set-interest-rate-paths-for-2023-gold-reacts-bullishly\/"},"modified":"2023-02-05T18:02:29","modified_gmt":"2023-02-05T23:02:29","slug":"fomc-boe-and-ecb-set-interest-rate-paths-for-2023-gold-reacts-bullishly","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/fomc-boe-and-ecb-set-interest-rate-paths-for-2023-gold-reacts-bullishly\/","title":{"rendered":"FOMC, BoE, and ECB Set Interest Rate Paths for 2023: Gold Reacts Bullishly"},"content":{"rendered":"

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]<\/a><\/sup> The Fed\u2019s 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 \u201cif\u201d there are more price pressures, \u201cthen\u201d further tightening will be required.[0]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

0. <\/span>“Week Ahead: Continued NFP and Central Bank Fallout, RBA, and Earnings” Action Forex, 3 Feb. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484767-week-ahead-continued-nfp-and-central-bank-fallout-rba-and-earnings\/<\/a><\/a><\/p>\n

1. <\/span>“FX Majors Weekly Outlook (30-03 February)” ForexLive, 30 Jan. 2023, https:\/\/www.forexlive.com\/news\/fx-majors-weekly-outlook-30-03-february-20230130\/<\/a><\/a><\/p>\n

2. <\/span>“A Huge Few Days Aahead” Action Forex, 31 Jan. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484136-a-huge-few-days-aahead\/<\/a><\/a><\/p>\n

3. <\/span>“FX Daily: Bracing for volatility” ING Think, 31 Jan. 2023, https:\/\/think.ing.com\/articles\/fx-daily-bracing-for-volatility\/<\/a><\/a><\/p>\n

4. <\/span>“FX Daily: Peak? What peak?” ING Think, 1 Feb. 2023, https:\/\/think.ing.com\/articles\/fx-daily-peak-what-peak<\/a><\/a><\/p>\n

5. <\/span>“Key Events In Developed Markets Next Week” MENAFN.COM, 3 Feb. 2023, https:\/\/menafn.com\/1105522123\/Key-Events-In-Developed-Markets-Next-Week<\/a><\/a><\/p>\n

6. <\/span>“Week Ahead \u2013 RBA Next to Hike, UK Might Avoid a Recession (For Now)” Action Forex, 3 Feb. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484735-week-ahead-rba-next-to-hike-uk-might-avoid-a-recession-for-now<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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]<\/a><\/sup> The Fed\u2019s 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 \u201cif\u201d there are more price pressures, \u201cthen\u201d further tightening will be required.[0]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

0. <\/span>“Week Ahead: Continued NFP and Central Bank Fallout, RBA, and Earnings” Action Forex, 3 Feb. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484767-week-ahead-continued-nfp-and-central-bank-fallout-rba-and-earnings\/<\/a><\/a><\/p>\n

1. <\/span>“FX Majors Weekly Outlook (30-03 February)” ForexLive, 30 Jan. 2023, https:\/\/www.forexlive.com\/news\/fx-majors-weekly-outlook-30-03-february-20230130\/<\/a><\/a><\/p>\n

2. <\/span>“A Huge Few Days Aahead” Action Forex, 31 Jan. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484136-a-huge-few-days-aahead\/<\/a><\/a><\/p>\n

3. <\/span>“FX Daily: Bracing for volatility” ING Think, 31 Jan. 2023, https:\/\/think.ing.com\/articles\/fx-daily-bracing-for-volatility\/<\/a><\/a><\/p>\n

4. <\/span>“FX Daily: Peak? What peak?” ING Think, 1 Feb. 2023, https:\/\/think.ing.com\/articles\/fx-daily-peak-what-peak<\/a><\/a><\/p>\n

5. <\/span>“Key Events In Developed Markets Next Week” MENAFN.COM, 3 Feb. 2023, https:\/\/menafn.com\/1105522123\/Key-Events-In-Developed-Markets-Next-Week<\/a><\/a><\/p>\n

6. <\/span>“Week Ahead \u2013 RBA Next to Hike, UK Might Avoid a Recession (For Now)” Action Forex, 3 Feb. 2023, https:\/\/www.actionforex.com\/contributors\/fundamental-analysis\/484735-week-ahead-rba-next-to-hike-uk-might-avoid-a-recession-for-now<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":457,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/458"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=458"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/458\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/457"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}