The Swiss National Bank’s Monetary Policy Committee surprised markets today, Thursday, after its first meeting in 2024, by deciding to cut interest rates by 25 basis points during its March meeting, bringing the rate to 1.50%. This was against expectations that the rate would be kept at 1.75%.
Short-term interest rates are one of the most important factors in measuring the strength of a currency. Traders are looking for the results of other indicators to predict the extent of future rate changes. The Swiss National Bank normally announces the target interest rates for Swiss franc deposits. The target rates are set according to the average price, and the interest rate decision is taken based on the monetary policy decisions and their results, which will be revealed later.
Fed Issues Interest Rate Decision and Sets Date for Cut
The US Federal Reserve decided to keep the interest rate unchanged at 5.25% – 5.5%.
This decision was in line with the near-unanimous consensus among investors that policymakers would hold rates steady again at the conclusion of the March meeting, keeping the target rate at 5.25%-5.50%.
The Fed did not change its previous forecasts for the level of cuts in 2024, despite some analysts expecting the Fed to backtrack on some of its intentions to cut rates in 2024 due to the recently released hotter-than-expected inflation data. The Fed revealed its expectations for the rate to reach 3.9% by the end of 2025 and 3.1% by the end of 2026, with a long-term target of 2.6%.
The Fed said it would not start cutting rates until it was more confident that inflation, which has fallen sharply in the past year but remains high, was coming down.
Global Gold Prices Hit All-Time Highs After Fed Decision
Global gold prices surged to a new record high during trading on Thursday, coinciding with a decline in the US dollar and bond yields after the Federal Reserve kept its expectations for three rate cuts this year.
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion and pressure the dollar, making gold cheaper for investors holding other currencies.
Gold and Dollar Now
Gold futures are up 2.23% to $2209 an ounce. While spot gold is up about 1% to $2207 an ounce. This comes after it hit an all-time high of $2222 earlier in the session. On the other hand, the dollar index is down 0.15% to 102.895 points.
Other Metals
Silver settled flat in spot trading at $25.63 an ounce, platinum rose 1.2% to $917.60 and palladium rose 1.2% to $1033.56.
S&P 500 Hits Historic Level After This Message from the US Federal Reserve
The S&P 500 index rose above 5200 for the first time on Wednesday, after the Federal Reserve kept interest rates unchanged and continued to signal three rate cuts this year, easing concerns that the recent bout of inflation would force the central bank to adopt a less hawkish stance.
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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.
