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What’s Next For Commodities As Fed Speeches Take Center Stage?

By:
Phil Carr
Published: Feb 5, 2024, 19:27 UTC

One of the dominant macro themes of 2024 that needs no introduction is the global pivot towards interest rate cuts this year.

Gold bullion, FX Empire

In this article:

The Impending Market Impact of the First 2024 Rate Cut and the Federal Reserve’s Strategic Moves

There is no deny that the first rate cut is gearing up to be a huge market-moving spectacle! Just about every corner of the economy was affected as the Federal Reserve raised interest rates from zero in early 2022 to 5.25% – 5.50%, the level they have been at since July 2023.

In a “60 Minutes” interview on Sunday, Fed Chairman Jerome Powell said that the Federal Reserve’s December 2023 forecasts for three interest rate cuts this year remain the same.

In December, participants in a meeting held by the Federal Open Market Committee predicted three cuts for 2024, bringing interest rates down to 4.6%.

Powell told CBS’s 60 Minutes show that “almost all” of the members of the Federal Open Market Committee think the U.S central bank will cut rates from their current 23-year high of 5.25 – 5.5% at some point over the course of 2024.

However, Powell did not explicitly provide a timeline during the interview, but instead signalled that the first rate cut could come in the “middle of the year, few months before the Election” in November.

Elsewhere, in an interview with Fox News, Donald Trump accused Jerome Powell of being “political”.

Trump told Fox News that Powell was going to make interest rate cuts this year “to help the Democrats,” adding, “it looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected”.

Trump, who is the frontrunner in the race for the Republican nomination – continued by saying he would look to replace the “political” chair of the Federal Reserve, Jerome Powell, when his term ends in 2026.

Last week, the Federal Open Market Committee held its benchmark rate steady for the fourth consecutive meeting in a row. With annual price growth now between 3% and 4% in the United States – it is clear that the general direction for rates will be downwards this year.

The big question now is when and how many rate cuts will happen this year?

The answer to that burning question may come from any of the half a dozen or more speeches from FOMC officials, scheduled throughout this week – which is guaranteed to move the markets significantly!

As always, traders will be scrutinizing every word from every Fed official for fresh clues into the central banks future monetary policy plans and most importantly, confirmation of when the first rate cut will come.

Commodity Price Forecast

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

About the Author

Phil Carrcontributor

Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.

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