The US Federal Reserve (Fed) will not hike its interest rates this year but plans to announce two rate hikes in 2023.
Fed Chairman Jerome Powell said during a press conference after the Federal Open Markets Committee (FOMC) meeting on Jun 16 that the US inflation was at around 2pc at present. The Fed expects inflation to remain at these levels this year and has therefore kept interest rates at near-zero levels.
Moreover, Powell said that while the overall US economy has seen a strong recovery from the COVID-19 pandemic due to the increase in vaccinations, sectors like aerospace and hospitality which were most impacted by the pandemic are still recovering and remain weak. Still, Powell said in his remarks, a lot would depend on the pandemic and the risk to the economic outlook because of it remains in place.
The markets, including the LME and Comex, had slid over worries of a rate hike before the FOMC meeting ended, but recovered after the announcement of the Fed deferring rate hikes to 2023.
However, the LME base metals complex and Comex copper markets continued to fall and opened at new lows on Thursday amid concerns over China’s policies to curb the increase in metal prices.