The U.S Federal Reserve Chair, Jerome Powell, underscored his dedication to containing inflation during his speech at the Economic Club of New York. He emphasized that the central bank would continue to enforce a restrictive monetary policy until a significant decrease in prices is observed. Powell also suggested the possibility of further interest rate hikes if inflationary pressures continue to be a concern.
Jerome Powell's Stance on Inflation
During his speech, Jerome Powell outlined his concern about the persistent high levels of inflation despite recent moderation. He noted that while both headline and core PCE inflation have shown a decline from their previous high levels this year, it's too soon to be confident that inflation will remain close to the Fed's 2% target.
"The route is likely to be uneven and time-consuming, but my colleagues and I are collectively dedicated to bringing down inflation to a steady 2 percent," Powell clarified during the luncheon.
Downward Pressure on Inflation and the Potential for Policy Tightening
Powell pointed out that the tightening financial conditions are contributing to a decrease in inflation. However, he alerted that continuous economic growth or constricted labor markets might necessitate further tightening of monetary policy.
"If there's further evidence of continuously above-trend growth, or if the labor market's tightness is no longer easing, that could put the progress on inflation at risk and might necessitate further tightening of monetary policy," Powell cautioned the attendees.
Monitoring Financial Developments
Powell mentioned that the longer-term Treasury yields have significantly increased, which has led to more stringent financial conditions. He confirmed that the central bank is keeping a close watch on these developments. "Persistent changes in financial conditions could impact the course of monetary policy, and we are closely monitoring these developments," Powell stated.
The 10-year Treasury yield peaked at 4.9% this week, reaching the highest level in 16 years. Following Powell's comments, the CME Fedwatch tool shows a 99% probability of a rate hike occurring next month. The general expectation is that the Fed will propose another 0.25 percentage point rate increase at its November meeting.
Unwavering Commitment to Inflation Control
Powell reiterated the Fed's unwavering commitment to controlling inflation, aiming to reach the central bank's 2% target in the long run. He conveyed that the Fed would maintain a restrictive policy until there is confidence that inflation is moving towards that objective.
Following Powell’s speech, all four U.S. benchmark stock indices saw a drop. Conversely, precious metals experienced a slight increase, and the crypto markets remained largely unaffected by Powell's statements. The fall in U.S. stocks was attributed to Powell's speech in New York.
We would love to hear your thoughts on Powell's recent statements at the Economic Club of New York. Please feel free to share your insights and opinions on this topic below.
Frequently Asked Questions
How is gold taxed in Roth IRA?
An investment account's tax rate is determined based upon its current value, rather than what you originally paid. If you invest $1,000 in mutual funds or stocks and then later sell them, all gains are subjected to taxes.
However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Dividends and capital gains are exempt from tax. Capital gains only apply to investments more than one years old.
These rules vary from one state to another. For example, in Maryland, you must take withdrawals within 60 days after reaching age 59 1/2 . In Massachusetts, you can wait until April 1st. New York allows you to wait until age 70 1/2. To avoid any penalties, plan your retirement savings and take your distributions as early as possible.
What are the advantages of a gold IRA
It is best to put your retirement money in an Individual Retirement Account (IRA). It's not subject to tax until you withdraw it. You control how much you take each year. And there are many different types of IRAs. Some are better for those who want to save money for college. Some are better suited for investors who want higher returns. For example, Roth IRAs allow individuals to contribute after age 59 1/2 and pay taxes on any earnings at retirement. However, once they begin withdrawing funds, these earnings are not taxed again. This account is a good option if you plan to retire early.
A gold IRA is similar to other IRAs because it allows you to invest money in various asset classes. Unlike a regular IRA where you pay taxes on gains, a gold IRA doesn't require you to worry about taxation while you wait to get them. This makes gold IRA accounts a great choice for those who want their money to be invested, not spent.
An additional benefit to owning gold through an IRA, is the ease of automatic withdrawals. This means that you don't need to worry about making monthly deposits. You could also set up direct debits to never miss a payment.
Finally, gold is one the most secure investment options available. Because it isn't tied to any particular country its value tends be steady. Even in economic turmoil, gold prices tends to remain relatively stable. Therefore, gold is often considered a good investment to protect your savings against inflation.
What precious metal should I invest in?
This question depends on how risky you are willing to take, and what return you want. Although gold has traditionally been considered a safe investment choice, it may not be the most profitable. You might not want to invest in gold if you're looking for quick returns. If you have time and patience, you should consider investing in silver instead.
If you don’t want to be rich fast, gold might be the right choice. Silver may be a better option for investors who want long-term steady returns.
How much should you have of gold in your portfolio
The amount of capital required will affect the amount you make. A small investment of $5k-10k would be a great option if you are looking to start small. As you grow, you can move into an office and rent out desks. You don't need to worry about paying rent every month. You only pay one month.
You also need to consider what type of business you will run. In my case, I am running a website creation company, so we charge clients around $1000-2000/month depending on what they order. So if you do this kind of thing, you need to consider how much income you expect from each client.
If you are doing freelance work, you probably won't have a monthly salary like I do because the project pays freelancers. You may get paid just once every 6 months.
You need to determine what kind or income you want before you decide how much of it you will need.
I suggest starting with $1k-2k gold and building from there.
Can I have physical gold in my IRA
Gold is money, not just paper currency or coinage. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of financial turmoil.
Many Americans now invest in precious metals. Even though owning gold is not a guarantee of making money, there are many reasons why you might want to add gold to your retirement savings portfolio.
One reason is that gold has historically performed better than other assets during periods of financial panic. The S&P 500 dropped 21 percent in the same time period, while gold prices rose by nearly 100 percent between August 2011-early 2013. Gold was one asset that outperformed stocks in turbulent market conditions.
Gold is one of the few assets that has virtually no counterparty risks. Even if your stock portfolio is down, your shares are still yours. If you have gold, it will still be worth your shares even if the company in which you invested defaults on its debt.
Finally, gold offers liquidity. This means you can easily sell your gold any time, unlike other investments. Because gold is so liquid compared to other investments, buying it in small amounts makes sense. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Yahoo Finance – Barrick Gold Corporation Stock Price, News & Quote – Barrick Gold Corporation (GOLD).
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement funds
Investing with gold or stocks
Investing in gold as an investment vehicle might seem like a very risky proposition these days. This is because many people believe gold is no longer financially profitable. This belief arises because most people believe that the global economy is driving down gold prices. They feel that gold investment would cause them to lose money. In reality, though, gold investment can offer significant benefits. Let's take a look at some of the benefits.
Gold is the oldest known form of currency. There are records of its use going back thousands of years. People around the world have used it as a store of value. Even today, countries such as South Africa continue to rely heavily on it as a form of payment for their citizens.
When deciding whether to invest in gold, the first thing you need to do is to decide what price per gram you are willing to pay. It is important to determine the price per gram you are willing and able to pay for gold bullion. If you don’t know what the current market price is, you can always call a local jewelry store and ask them their opinion.
Noting that gold prices have fallen in recent years, it is worth noting that the cost to produce gold has gone up. The price of gold may have fallen, but the production costs haven’t.
Another thing to remember when thinking about whether or not you should buy gold is the amount of gold you plan on purchasing. It makes sense to save any gold you don't need to purchase if your goal is to use it for wedding rings. This is not a wise decision if you're looking to invest in long-term assets. Selling your gold at a higher value than what you bought can help you make money.
We hope that this article has helped you gain a better understanding and appreciation for gold as an investment option. We recommend that you investigate all options before making any major decisions. Only then can informed decisions be made.
By: Jamie Redman
Title: Jerome Powell's Firm Commitment to Curb Inflation: A Closer Look at Monetary Policy
Sourced From: news.bitcoin.com/feds-powell-hints-at-continued-elevated-rates-fedwatch-tool-indicates-near-certain-hike-next-month/
Published Date: Thu, 19 Oct 2023 21:30:48 +0000