Though not a new word to describe Fed policy intentions, using it in today’s statement in the context of obviously rising inflation and inflationary expectations is a new policy stance – one very favorable for gold and likely the Trump administration as well. It seems that the Fed is willing to chase the inflation rate rather than trump it (forgive the allusion), and as long as that’s the case, the markets will read inflation into the economic script for the future.
I think some were expecting “accommodative” to disappear from the Fed-speak particularly after Yellen’s speech earlier this month when she said the central bank is likely to pursue “a neutral” rates policy. “A ‘neutral’ policy stance,” said Yellen pre-meeting,” is one where monetary policy neither has its foot on the brake nor is pressing down on the accelerator.” Post-meeting, the word “accommodative” was still there though – like a bright and shiny gold coin sitting on the sidewalk waiting to be pocketed. It was. Gold and silver shot higher and so did stocks and even bonds.
All of this blends nicely with themes raised in our March newsletter:Watch movie online The Transporter Refueled (2015)
Will banks’ excess reserves fuel a new monetary crisis?
Don’t look now but inflation and a new gold rush might be in our future.