Federal Reserve Chair Jerome Powell's recent remarks have sparked a debate on the adequacy of current interest rates, adding to the uncertainty in the economic landscape. Despite strong gross domestic product growth, Powell's address revealed the Fed's firm position, as he expressed his lack of confidence in the effectiveness of their restrictive policies.
Federal Reserve Chair Acknowledges Uncertainty Regarding the Impact of Interest Rate Policies
During an event hosted by the International Monetary Fund (IMF) in Washington D.C., Jerome Powell openly admitted, "We know that ongoing progress toward our 2 percent goal is not assured." He also acknowledged that "inflation has given us a few head fakes." Powell emphasized the Fed's readiness to tighten policies further, if necessary, in order to address inflationary pressures and achieve the 2% goal.
While Powell's hawkish sentiment caused gold prices to remain stable, crypto assets continued to demonstrate strength. Bitcoin (BTC) approached the $38,000 mark during early morning trading sessions on Thursday before retracing. All four major U.S. benchmark indices experienced declines, ranging from 0.65% to 1.57%. The Russell 2000 witnessed the most significant drop at 1.57%, followed by the Nasdaq (down 0.94%), the Dow Jones (down 0.65%), and the S&P 500 (down 0.81%). The New York Stock Exchange (NYSE) closed 0.76% lower.
Chairman Powell explained the enigmatic nature of the current inflationary period, which was initially triggered by unforeseen shifts in demand and labor supply due to the Covid-19 pandemic. Despite a temporary decrease in core PCE inflation, Powell highlighted the persistent resurgence towards the end of 2021, compounded by a tight labor market and robust household demand, which has further intensified inflationary pressures.
Powell insisted that "a response of monetary policy to higher prices stemming from an adverse supply shock should be attenuated because it would otherwise amplify the unwanted decline in employment." However, he also added that responding aggressively to passing price increases could exacerbate macroeconomic volatility without supporting price stability.
Meanwhile, the 10-year Treasury note has remained relatively stable at 4.636%, showing a 0.98% increase over the past five days. Manish Kabra, a strategist at Societe Generale SA in London, commented on Friday that "Powell's statement has shifted the trading consensus, suggesting that the US 10-year yield has peaked for the year. Consequently, risk assets that rallied in recent weeks are now re-evaluating the implications if the US 10-year yield reaches 5%."
We would love to hear your thoughts on Chairman Powell's recent speech. Please share your opinions and insights in the comments section below.
Frequently Asked Questions
What is a Precious Metal IRA, and how can you get one?
Precious metals can be a good investment for retirement accounts. Precious metals have been around since Biblical times and still hold their value today. You can diversify your portfolio by investing in precious metals, such as gold, platinum, and silver.
Many countries also permit citizens to store money in foreign currencies. You can buy Canadian gold bars and keep them at home. Then, when you go back to visit family, you can sell those same gold bars for Canadian dollars.
This is an easy way to invest precious metals. It's especially useful if you live outside of North America.
What are the pros and disadvantages of a gold IRA
If you want to diversify your holdings but aren't able to access traditional banks services, a gold IRA is a great option. It allows you to invest in precious metals such as gold, silver, and platinum without paying taxes on any gains until they're withdrawn from the account.
The downside is that early withdrawals will result in ordinary income taxes on earnings. These funds are not held in the country so creditors cannot seize them if you default on your loan.
So if you like owning gold without worrying about taxes, a gold IRA may be right for you.
Can you make money in a gold IRA
It is important to first understand the market in order to be able to invest and secondly to identify what products are currently available.
If you don’t know anything, it is best to wait until you have enough information so that you can trade effectively.
Find a broker that offers the best service to your account type.
There are many accounts available, including Roth IRAs and standard IRAs.
A rollover may be an option if you have other investments like stocks or bonds.
- Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (forbes.com)
- Silver must be 99.9% pure • (forbes.com)
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
How to decide if a Gold IRA is right for you
Individual Retirement accounts (IRAs) are the most common type of retirement account. Individual Retirement Accounts (IRAs) are available through financial planners, banks, mutual funds and employers. The IRS allows individuals to contribute up $5,000 annually without worrying about tax consequences. This amount can go into any IRA. However, certain IRAs have limits on the amount you can deposit. A Roth IRA is only available to those who are at least 59 1/2. Under 50-year-olds must wait until they reach 70 1/2 years of age before you can make contributions. In addition, some people who work for their employer may be eligible for matching contributions from their employer.
There are two types primarily of IRAs. The traditional IRA allows you the opportunity to invest in stocks and bonds as well as other investments. However, the Roth IRA only allows you to invest after-tax dollars. Roth IRA contributions can be made without tax, but they will still be subject to taxes if you withdraw from it. A combination of both accounts may be preferred by some people. There are pros and cons to each type of IRA. So what should you consider before deciding which type of IRA works best for you? Here are three things to keep in mind:
Traditional IRA pros:
- Contribution options vary by company
- Employer match possible
- More than $5,000 in savings per person
- Tax-deferred growth up to withdrawal
- May have restrictions based on income level
- The maximum contribution limit is $5,500 per year ($6,500 if married and filing jointly)
- Minimum investment is $1,000
- After age 70 1/2 you are required to begin mandatory distributions
- You must be at the least five years of age to open an IRA
- Transfer assets between IRAs cannot be done
Roth IRA Pros:
- Contributions do not attract taxes
- Earnings grow without paying taxes
- There are no minimum distribution requirements
- There are only a few investment options available: stocks, bonds and mutual funds.
- There is no maximum contribution limit
- Transfer assets between IRAs is possible without restrictions
- To open an IRA, you must be 55 years old or older
Considering opening a new IRA, it's essential to know that not all companies offer the same IRAs. Some companies allow you to choose between a Roth IRA or a traditional IRA. Some will let you combine them. There are different requirements for different types. Roth IRAs have no minimum investment requirements, while traditional IRAs require a minimum $1,000 investment.
The Bottom Line
It is important to decide whether you want taxes now or later when you choose an IRA. If you're planning to retire in the next ten-years, a traditional IRA may be the best option. Otherwise, a Roth IRA may be better suited for you. Either way, it's always a good idea to consult a professional about your retirement plans. A professional can help you determine the best option for your situation and keep track of what's going on in the market.
By: Jamie Redman
Title: Fed Chair Powell's Hawkish Tone Rattles Markets as Inflation Concerns Persist
Sourced From: news.bitcoin.com/fed-chair-powells-hawkish-tone-rattles-markets-as-inflation-concerns-persist/
Published Date: Fri, 10 Nov 2023 17:30:30 +0000