the Fed and inflation

The Federal Reserve is caught in a web of its own making.

Financial experts believe that the Fed’s back is now against the wall with no good options left.

Peter Schiff, chief market strategist at Euro Pacific Asset Management, and renowned gold bug, had the following to comment, “The Federal Reserve has trapped themselves; either they raise interest rates and bankrupt the Treasury, or they don’t raise rates, let inflation spiral out of control, and bankrupt the American people…”

This comes at a time where the Fed moved up its timeline for rate hikes due to a spike in inflation rates.

In March, the Fed claimed that they saw no increase in rates coming until at least 2024. Just a few months later, they have indicated that these rate hikes could now come as soon as 2023.

And if that’s not bad enough, some believe that we could see two hikes in 2023 alone.

Kathy Jones, head of fixed income at Charles Schwab, told CNBC:

“If you’re going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal. It takes maybe 10 months to a year to taper at a moderate pace. Then you’re looking at we need to start tapering maybe later this year, and if the economy continues to run a little bit hot, rate hikes sooner rather than later.”

So much for the narrative that The Federal Reserve has our economy under control…

“This is not what the market expected. The Fed is now signaling that rates will need to rise sooner and faster, with their forecast suggesting two hikes in 2023. This change in stance jars a little with the Fed’s recent claims that the recent spike in inflation is temporary…”

Deputy chief economist at Aberdeen Standard Investments, James McCann, stated.

The Fed seems to be all over the place as in March, their headline inflation projection rate was around 2.4%, and just a month later, they increased that to 3.4%, a full percentage point higher.

One percent may not seem so significant, but when that change comes in just a few weeks from their original estimate, one could only think what their estimations may bring in the following months.

“I expect that we’ll be able to say more about timing as we see more data, basically. There’s not a lot more light I can shed on that.” Federal Reserve Chairman Jerome Powell told reporters…

With a not so confident and reassuring statement from the Fed, don’t get caught in your very own financial dilemma.

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