What’s next for commodities as Fed prepares to pivot on rate hikes? [Video]

It’s official: The most eagerly awaited economic report of this month, if not this year was released on Wednesday and showed the U.S central bank favors slowing down the pace of interest rate hikes to mitigate risks of overtightening.

Minutes from the FOMC Monetary Policy Meeting earlier this month revealed several officials backed the need to slow the pace of rate hikes – signalling a pivot to smaller interest rate increases from as early as December. This adds weight to expectations the central bank will raise rates by 50 basis points next month, finally ending a run of super-sized 75 basis point hikes.

In another revelation, some committee members expressed concern about risks to the global economy should the Fed continue to press forward at the same aggressive pace.

Several Fed officials signalled that their assessment of the risks of a recession had grown to almost 50-50. That was the first such warning since the central bank began raising rates aggressively in March, bringing their target benchmark rate to a range of 3.75% to 4%.

Whichever way you look at it, one thing is clear. This is the start of a more different and dovish narrative from the Fed, which ultimately presents an extremely bullish backdrop for commodity prices ahead.

Since the beginning of this year, a long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have repeatedly described commodities as their “preferred asset class over the next decade”.

And now we could be about to see why!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: