Have gold investors fully priced in the next Fed rate hike

New York (Feb 18)  As the markets look forward to next month's U.S. Federal Reserve rate decision it is leading analysts to work out how hawkish the central bank and its members are. Money markets have fully priced in a 25bps hike but in the minds of many, this is potentially not enough to keep inflation at bay. Analysts and investors will also be looking for clues to find out how aggressive the Fed could be beyond next month's meeting. Morgan Stanley's Chief U.S. Economist Ellen Zentner said recently that "Following the recent changes to our inflation outlook, we now expect the Fed to deliver a total of six 25bp hikes this year,"

Looking at what FOMC members are staying for themselves, Federal Reserve Bank of Cleveland President Loretta Mester said she supports raising interest rates next month and tightening policy at a faster pace if needed to curb inflation. She added, "I believe it will be appropriate to move the funds rate up in March and follow with further increases in the coming months,". She went on to say "If by mid-year, I assess that inflation is not going to moderate as expected, then I would support removing accommodation at a faster pace over the second half of the year."

On January 30th Atlanta president Fed's Bostic noted that high inflation could provoke the FOMC into a 50-bps rate hike. Having said that they are not all in the same camp as St. Louis president Bullard downplayed a 50-bps rate hike, noting that such a move doesn't "help us, at least sitting here today, I don't think that really helps us."