Kitco News, Released on 3/17/22

The U.S. Federal Reserve hiked the Fed Funds rate by 25 basis points on Wednesday, the first rate hike since 2018. While this move was largely anticipated, the markets still rallied on the news; both the stock markets and safe haven assets like gold rose. The dollar fell slightly. Steve Hanke, professor of Applied Economics at Johns Hopkins University told David Lin, anchor for Kitco News, that the stock markets interpreted this news as quite dovish. Additionally, gold rallied because the gold market understands that this 25 basis point hike won’t be enough to combat inflation, which is likely to remain in the 6% to 9% range until 2024.

0:00 – Fed hikes rates
1:30 – Gold’s move
4:15 – Root causes of inflation
6:11 – Inflation vs. deflation
8:14 – Real wage forecast
11:10 – Reported vs. actual inflation
17:29 – What can reverse inflation?
20:01 – Fed reducing balance sheet
21:53 – Hanke-Cofnas Gold Sentiment Index

Steve Hanke is an American applied economist at the Johns Hopkins University in Baltimore, Maryland. He is also a senior fellow and director of the Troubled Currencies Project at the libertarian Cato Institute in Washington, DC, and co-director of the Johns Hopkins University’s Institute for Applied Economics, Global Health, and the Study of Business Enterprise in Baltimore, Maryland. Hanke is known for his work as a currency reformer in emerging-market countries. He was a senior economist with President Ronald Reagan’s Council of Economic Advisers from 1981 to 1982, and has served as an adviser to heads of state in countries throughout Asia, South America, Europe, and the Middle East. He is also known for his work on currency boards, dollarization, hyperinflation, water pricing and demand, benefit-cost analysis, privatization, and other topics in applied economics. Hanke has written extensively as a columnist for Forbes magazine and other publications. He is also a currency and commodity trader.

  economy, Fed, gold, inflation, markets, steve hanke