January 3, 2018
The Bank of Canada did increase its key interest rate on September 6, 2007 to 1.00% from 0.75%, the second time this summer. The Bank of England raised rates by 25 basis points on November 2, 2017 for the first time in 10 years. On Wednesday, December 13, 2017 the Federal Reserve, as expected, raised rates by 25 basis points. US banks followed through by upping their prime lending rates by a similar amount from 3.50% to 3.75%. The Federal Open Market Committee (FOMC) revised upward its economic growth forecast to 2.5% in 2018, up from 2.1%. It also forecasts the jobless rate will dip to 3.9%. This implies that U.S. inflation will move higher in coming months giving reason to expect the FOMC to adhere to its plan for gradual interest rate hikes, possibly three during 2018. This newsletter suggests that long term investors consider adding gold-related investments to their portfolio.