The Federal Reserve’s latest 1/2 per cent interest-rate hike has done nothing to halt rising inflation fears. Only a few days after the Fed move, gold and commodity prices soared while bonds plummeted. The dollar remains weak. The financial markets have signaled thumbs down.
Up and coming Sanwa Securities economist Michelle Colley Laughlin put the story succinctly to clients in her latest newsletter. She tells them to “forget the federal funds rate, keep your eye on gold.” Market prices are the best indicators of monetary policy, reflecting the views of millions of investors acting in their own profit-maximizing self-interest.
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