Investors await two key events: Powell’s speech and December’s CPI

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Now that the jobs report has come and gone market participants are awaiting two exceedingly important events that will occur today and on Thursday. Today the chairman of the Federal Reserve, Jerome Powell delivered a speech at 9 AM EST at a central bank conference in Riksbank, Sweden. Then on Thursday, the BLS (US Bureau of Labor Statistics) will release the CPI report for December. Collectively these two events will shape the forward direction of the financial markets including the precious metals.

The chairman today said that the Federal Reserve might have to make unpopular decisions to stabilize prices. In his address at the central bank conference, he underscored that it is unpopular politically to make the tough decisions required to stabilize prices and inflation.

He addressed the need for the Federal Reserve to not be pressured by political influence while it addresses and resolves the persistently high inflation that currently exists.

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” he also added, “The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors”.

He purposely left out any mention that would contain direct clues as to where the Federal Reserve’s monetary policy is headed. He also made no mention of the rationale behind last year’s actions which included raising interest rates during seven FOMC meetings bringing the benchmark Fed funds rate to 4.25%. A full transcript of today’s speech can be found at the following link.

On Thursday, the BLS will release its most current inflationary data vis-à-vis the Consumer Price Index for December. According to the Federal Reserve of New York, inflation for December is expected to show inflation easing to 6.5% from a peak of 9.1% in June.

According to PYMNTS.com, “In a press release, the Federal Reserve Bank of New York’s Center for Microeconomic Data said: “Median one-year-ahead inflation expectations continued to decline in December, falling by 0.2 percentage point to 5.0%, its lowest reading since July 2021. In contrast, three-year-ahead inflation expectations were unchanged in December at 3.0%.”

Chairman Powell's speech today coupled with the CPI report on Wednesday will be important fundamental events and could have a profound impact on gold and silver pricing.


Wishing you as always good trading,

Gary S. Wagner - Executive Producer