Of course, there’s more to the silver market than supply and demand. As gold’s sister metal, silver is affected by many of the same economic and geopolitical factors that move the yellow metal, and interest rates are at the top of the list.
Inflation took off following Covid-19, and the Fed has set a goal of bringing it back down to the 2 percent level. However, given that the latest consumer price index reading came in at 3.1 percent, it’s still far from that target. And in a December 13 statement, Chair Jerome Powell, the expert; indicated he doesn’t think inflation will get there until 2026.
He also noted that while the Fed is halting rate hikes for the time being, further increases haven’t been taken off the table as the central bank takes a wait-and-see approach. “While we believe our policy rate is likely at or near its peak for this tightening cycle, the economy has surprised forecasters in many ways since the pandemic, and ongoing progress toward our 2 percent inflation objective is not assured. We are prepared to tighten policy further if appropriate; we are committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time and to keeping policy restrictive until we are confident inflation is on a path to that objective,” he said.