TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Precious metals prices were higher across the board on Wednesday reflecting short covering and pent up safe-haven demand as Gold rose 0.23 percent to $1,274.80 an ounce, and Silver climbed 0.45 percent to $19.87 an ounce shortly after the Federal Open Market Committee (FOMC) announced that it will trim another $10 billion from its monthly bond buying program, while at the same time lowering its economic forecast for 2014.
The Fed's massive quantitative easing (QE) program is still buying $35 billion each month in assets to add to an already bloated $4.3 trillion balance sheet. The Fed slashed its 2014 outlook from an optimistic 2.8 to 3.0 percent in March to a 2.1 to 2.3 percent range today. Policymakers also cut their projected long-run interest rate to 3.75 percent from the 4 percent mark announced in March.
The long-run interest rate is the rate that will remain in place even after the unemployment rate falls to the desired level around 5.5 percent while inflation is at 2 percent. Short term interest rates have remained near zero since 2008, and they will stay unchanged in June. The Fed's benchmark rate is projected to be 2.5 percent by the end of 2016, up slightly from the Fed's March forecast of 2.25 percent.
June's FOMC meeting marked the first for three members of the policymaking committee, Vice Chair Stanley Fischer, Fed Governor Lael Brainard, and new Cleveland Fed president Loretta Mester. Fed Chair Janet Yellen, at her press conference following the policy meeting, said that the labor market still needs to show improvement. “Underutilization in the labor market remains significant,” said Yellen before adding that she sees “sufficient underlying strength in the economy” to support continued improvement in hiring.
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