Silver Gains Ground as Fed Delivers Dovish MessageSilver prices posted considerable gains after the Fed rate decision was more dovish than expected. Currently, the metal is trading slightly below the $17.00 level.
Silver prices have steadied on Thursday, after posting gains following the Federal Reserve rate announcement on Wednesday. In the European session, silver is trading at $16.84, unchanged on the day.
Inflation Remains Low
On Wednesday, the U.S. released consumer inflation numbers for November. CPI ticked lower to 0.3%, down from 0.4% a month earlier. Still, this beat the estimate of 0.2%. The core release remained steady at 0.2%, matching the forecast. With inflation at low levels, the Fed can continue its wait-and-see stance regarding the economy, and there is no pressure on policymakers to raise rates.
Dovish Fed Boosts Silver Prices
As was widely expected, the Federal Reserve maintained the Federal funds rate at a range between 1.50% and 1.75%. However, policymakers were more dovish than many analysts expected, which sent the dollar lower, while boosting precious metals such as silver and gold.
Fed Chair Jerome Powell said that the U.S. economy was performing well, despite difficulties in global economic conditions. Still, it was apparent that the Fed was in dovish mood, as the “dot plot” of FOMC members’ future projections showed a pronounced downward shift compared to the previous meeting in September.
At the Wednesday meeting, 13 of the 17 FOMC members projected no change in current rate levels until 2021. Back in September, eight members saw no change, while nine members expected one or more increases in 2020. FOMC members maintained the GDP forecast of 2.2% for 2019, but lowered its inflation forecast for 2019 to 1.6%, compared to 1.8% in September.