Here is a look at interest rate madness and the gold and silver bull markets.

April 25 (King World News) Gerald Celente:  After saying earlier this spring that the U.S. Federal Reserve planned three rate cuts this year, and hinting they could begin in June, Fed chair Jerome Powell has put a pause on all that.

Inflation has resisted the central bank’s efforts to beat it down to the 2-percent target. In March, the Consumer Price Index rose by 3.5 percent, year on year, more than it did in February; core inflation, which screens out food and energy costs, was up 3.8 percent. 

“The recent data have clearly not given us greater confidence [in inflation’s defeat] and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said in comments last week at a meeting in Washington.

Investors also fear the central bank might reduce the number of cuts this year from three to two or even one…

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If inflation refuses to yield, the Fed might even raise rates again, John Williams, president of the Federal Reserve Bank of New York, said last week in comments quoted by The Wall Street Journal.

After Powell spoke, interest-rate futures speculators pared their bets, pricing in a rate reduction of 0.4 of a percent all year, not even two quarter-point cuts.

Analysts at Société Générale now say they do not expect the Fed to cut rates at all this year. In January, speculators were wagering on six cuts in 2024.

If inflation refuses to yield, the central bank might even raise rates again, John Williams, president of the Federal Reserve Bank of New York, said last week in comments quoted by the WSJ.

The market is now pricing in less than one quarter-point decrease in the Fed’s interest rates before the central bank’s mid-September meeting, the last one before November’s presidential and Congressional elections.

Equities reacted modestly to Powell’s words, indicating markets already had taken into account the likelihood that three rate cuts of a quarter-point each is no longer probable.

If inflation remains stuck, the Fed will face a choice.

It can hold to its 2-percent target. The longer it does, the more the economy will suffer as consumers delay buying appliances, cars, homes, and other big-ticket items until interest rates fall and monthly payments become affordable.

Alternatively, the central bank could “adjust” its target to a lower number—maybe 3 percent. The European Central Bank did something similar in 2022 when it changed its target from 2 percent to “around 2 percent.”

Accommodating the higher number would tell borrowers, lenders, and markets that inflation above 2 percent is the new normal. People would stop delaying their purchases, lenders would find creative new ways to finance them, investors would reshuffle their portfolios, and the economy could resume its activities.

If the Fed were to surrender and normalize a higher rate of inflation, prices probably would keep rising, putting those cars, homes, and other high-cost items further and further out of reach for more and more people. 

We had forecast the Fed would lower rates in March, but we got it wrong since we did not think they would be playing the inflation fear tactic. Instead, in the run-up to the presidential election in November they would lower interest rates to push up the economy and keep those in power, in power… such as former Fed-Head Janet Yellen who is now playing the role of Treasury Secretary.

However, we maintain our forecast for lower interest rates to boost up the economy since the major concern of the general public remains: “It’s the economy, stupid.”

Here Is What You Need To Know
King World News note:  King World News kept warning that it was madness to lower rates into another inflationary wave. This was the network’s position from the moment the Fed announced in 2023 that they would be lowering rates at some point in 2024. Lately it appears that more and more analysts as well as the Fed have come to the same conclusion. Regardless, all of this is very reminiscent of the brutal stagflation the world experienced in the 1970s where gold soared 25.5x higher and silver skyrocketed in value 38x. As for the mining stocks, they ended up in a historic mania. Expect something similar this time.

Celente – $3,000 Gold In 2024
To listen to one of Gerald Celente’s most important interviews ever discussing his predictions for the price of gold and what other surprises to expect in 2024 CLICK HERE OR ON THE IMAGE BELOW.

China Has Stockpiled 30,000+ Tonnes Of Gold
To listen to Alasdair Macleod discuss China’s massive gold hoard as well as what to expect for the rest of 2024 CLICK HERE OR ON THE IMAGE BELOW.

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