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Spot gold spiked to $1,334 an ounce, a two-week high, after the Federal Reserve announced there would be no rate hike in September.
The Federal Reserve, chaired by Janet Yellen, said it is maintaining the current target rate for the federal funds rate at 1/4 to 1/2 percent.
Silver also gained topping at $19.80.
In a news release the Fed said factors were pushing it to raise the rate, such as solid job gains and increased household spending. However, inflation is running below the committee’s 2% percent longer-run objective and business fixed investment remains soft.
“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives,” said the Federal Reserve.
“The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
At a press conference, Yellen was asked if the upcoming election put pressure on the Federal Reserve not to act. Donald Trump accused the Janet Yellen of keeping interest rates low due to White House pressure.
“I think Congress very wisely established the Federal Reserve as an independent agency in order to insulate monetary policy from short term political pressures,” said Yellen.
“I can say emphatically that partisan politics plays no role in our decisions about our stance regarding monetary policy.”
Ahead of the announcement, Lawrence Summers, former Director of the NEC for President Obama, fired off a series of tweets urging the Fed not to raise.
The Fed should not raise rates because in the 8 year of recovery it should be targeting inflation above 2% so inflation averages 2%. 4/11
— Lawrence H. Summers (@LHSummers) September 21, 2016
The Fed should not raise rates because it will come as a shock at a fragile moment 6/11 — Lawrence H. Summers (@LHSummers) September 21, 2016
Tightening now will induce artificial dollar strength, which is hardly a good thing given the magnitude of protectionist pressures 11/11
— Lawrence H. Summers (@LHSummers) September 21, 2016
Creative Commons image of Janet Yellen by Day Donaldson
4 Comments
dutchmann64
What a Shocker!!!!!!!
……OMG!! the fed did’nt raise the interest rate!!!!! ( Insert sacrcasm here ) What a complete joke. I am embarrassed for them. Just ask anyone in the manufacturing sector how things are going;……I work with clients world wide and they too are in a perpetual holding pattern;….no work, no tangible projects in the pipeline. Question is how long can we last?? Buy gold the big crash is on the way and will make the dirty 30’s pale in comparison. We are a society of face bookers and #’ taggers. The most important new items being Brangelina. Pathetic to say the least. Buy gold;…..pay your debts…….and get in touch with the goings on around you.
dutchmann64
Is anyone actually shocked that the FED didn’t raise the rate;…….OMG!!! If you were sidelined by the decision to hold…..have I got a deal for you. LOL
harryzero
I think the Fed is like a rabbit caught in the head lights of oncoming traffic. Doesn’t know which way to jump, hoping that their ‘positive’ sound bytes will be enough to justify their existence. The fines and penalties from mis sold mortgage bonds should be helicoptered into the pocket of those that lost their homes, pensions, and reduce student debt. This may get the US economy moving instead of printing money to further inflate the bond and equity markets.
dutchmann64
we have problems on both sides of the border……it is really quite the gong show. It would almost be funny were it not for the grim reality of the pain suffering that is still to come. We are at the tip of what will be our worst fears. Spending all the while knowing it is the next generation that must pay it back. Imagine that you and your spouse have have one or two kids and you borrow and pend creating massive household debt…..and then leave it for the kids to pay it off. Sounds crazy, but that is exactly what is going on. We the current keepers of the house won’t feel the pressure souch but the next generation will be crushed. I feel absolutley sick about it. I personally have paid all debt; motgage, credit lines, cards off. I am teaching my kids the same and hopefully they will stick handle through the mess that we have bestowed upon thier generation.