Will 2023 be the year of disinflation or transitory disinflation? [Video]
|The most pivotal moment in monetary-policy history took place earlier this month with Federal Reserve Chairman Jerome Powell flipping the script from “the year of inflation to the year of disinflation”.
At the FOMC press conference on February 1, Jerome Powell didn’t just double down on his disinflation comments – he started his whole speech by declaring that the “disinflationary cycle has begun.”
In fact, Powell used the word "disinflation," 13 times at his press conference, which is a significant turnaround from prior meetings.
And just in case anybody didn't hear him the first time around, Powell made sure to drop the word "disinflation" over a dozen times during his speech at the Economic Club of Washington, last week.
Powell doesn’t live under a rock. He is unquestionable the world’s most powerful and influential Central Banker.
He knows exactly what he's doing and his every word is carefully orchestrated to achieve a very specific market reaction.
In these case, that's “disinflationary” optimism.
Looking ahead, this week’s hotly awaited U.S Consumer Price Inflation data will put the Fed’s new disinflationary messaging to the test. The January Consumer Price Index data, will either confirm two more 25 basis points rate hikes this year or supercharge the 'Fed pivot' narrative.
Elsewhere on the radar this week will be the release of the FOMC Monetary Policy Meeting Minutes, scheduled for release on Wednesday.
Traders will be closely monitoring whether the dovish comments made by Jerome Powell and several voting members of the Fed's policy-setting committee match up with the notes from the latest Meeting Minutes or completely contradict them.
Whichever way you look at it, one thing is clear. This is the start of a more different and dovish narrative from the Fed, which ultimately presents an extremely bullish backdrop for Commodity prices ahead.
Since the beginning of this year, a long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have repeatedly beat the drum that higher prices are coming – predicting “Commodities will be the best-performing asset class in 2023”.
And now, we may finally be on the verge of seeing why! That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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