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March 8 (Reuters) – Gold prices slipped to a one-week low on Wednesday after US Federal Reserve Chair Jerome Powell said interest rates might need to go higher than expected to curb inflationary pressures.

Spot gold eased 0.1% to USD 1,812.44 per ounce, as of 0634 GMT. US gold futures edged down 0.2% to USD 1,816.50.

The Fed will likely need to raise rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual, two-day testimony before Congress.

In the aftermath of Powell’s remarks on Tuesday, gold prices had dropped as much as 1.9%, or by more than USD 30, to USD 1,812.55.

“Nobody wants to buy gold today following the hawkish remarks from Powell… there’s also very little gold-selling, with prices pushing slightly lower but without conviction – gold almost looks startled today,” said Matt Simpson, a senior market analyst at City Index.

“A break below USD 1,800 is on the cards for gold,” he added.

Higher interest rates usually dull gold’s appeal because they increase the opportunity cost of holding the asset which bears no interest.

The Fed slowed to a 25 basis-point rate increase at its last meeting, after bigger hikes last year to fight decades-high inflation, but a slew of data in recent weeks spurred concerns that the US central bank would persist with monetary policy tightening.

Markets are now pricing in a 50 basis-point hike at the Fed’s March 21-22 policy meeting.

The dollar index hit a three-month high, making bullion less affordable for buyers holding other currencies.

Meanwhile, Australia’s Perth Mint reported gold product sales in February fell to their lowest in more than two years, while silver sales rose about 20% on the month.

Spot silver was down 0.1% at USD 20.03 per ounce, platinum added 0.8% at USD 936.72 and palladium rose 0.3% to USD 1,391.40.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

DUBLIN, March 8 (Reuters) – Ireland’s central bank sees inflation growing at a slower than previously forecast 5% this year before falling towards 2% by 2025 when core inflation is expected to be higher than the headline rate.

Annual Irish inflation, as measured by the Harmonised Index of Consumer Prices (HICP), has fallen to 8% from a high of 9.6% last July, primarily due to lower energy prices but also slower growth in prices charged by the services sector.

The central bank on Wednesday cut its forecast for 2023 HICP growth from the 6.3% predicted in October and sees price growth slowing to 3.2% in 2024 and 2.2% in 2025, when core inflation of 2.6% would pass out the headline rate.

It added, however, that a significant amount of uncertainty remained around the precise path for inflation, and the extent to which underlying inflation measures will remain elevated.

The central bank also nudged up its forecast for domestic economic growth for 2023 after activity late last year and early this year was “somewhat stronger” than expected, while the global economic backdrop proved more benign.

Modified domestic demand (MDD), officials’ preferred measure of economic growth, is now forecast to rise by 3.1% this year after it expanded by 8.2% thanks to a post-lockdown investment boom last year.

While higher prices caused real average household disposable income to fall slightly in 2022, the bank now sees real incomes growing by more than 2% in each of the next two years, supporting consumer spending of more than twice that level.

The jobless rate is also set to remain near record lows for the next three years, spurring average wage growth of 6.5% this year that the bank expects to moderate to 3.3% in 2025 with no nascent sign of a wage-price spiral emerging.

After Ireland produced one of the few budget surpluses in Europe last year, the central bank significantly increased the degree to which that would increase. It sees a surplus of 2.7% of gross national income this year, rising to 4.8% or 15.8 billion euros in each of the following two years.

(Reporting by Padraic Halpin; Editing by Lincoln Feast)

WASHINGTON, March 7 (Reuters) – The White House on Tuesday underscored the importance of waiting for more data as the Federal Reserve signaled it could push interest rates higher than expected given less progress than central bankers had hoped in lowering inflation.

Asked about Fed Chair Jerome Powell’s comments earlier in the day that it would be appropriate to raise rates more than expected in the face of those setbacks, and possibly at a swifter pace, a White House official, who declined to be named, said it was vital not to rely too much a single month’s data.

“The White House isn’t going to interfere with the Fed’s management,” the official said, reiterating the independence of the US central bank. “But we’re dealing with one month of data and people need to sit back and take a breath.”

The White House is reliant on Powell, a moderate Republican, to steer the economy to a soft landing as Democratic President Joe Biden gears up for a second presidential campaign that will focus on job creation and new investment.

Inflation has been a huge factor in driving down Biden’s approval ratings.

Powell, in the first of two days of testimony to Congress, earlier had bemoaned the “partial reversal” of the progress Fed officials thought they had seen in inflation coming down through the end of last year.

A raft of data covering January released over the course of last month, including reports showing more than half a million new jobs, robust consumer spending and stronger-than-expected readings of inflation, showed the economy may not be slowing to the degree Fed officials believe is needed to bring inflation down to its targeted level of 2% annually.

Powell told the Senate Banking Committee the data had come in stronger than expected, which suggested interest rates would “likely be higher than previously anticipated.”

His testimony prompted BlackRock, the world’s largest asset manager, to forecast the Fed could raise interest rates to 6% and keep them there for an extended period of time.

Tuesday’s hearing highlighted the gap between the Fed’s focus on achieving its 2% inflation target and the White House and progressive Democrats’ push for more, better-paying jobs.

Senator Elizabeth Warren and other Democrats grilled Powell on the impact of rate hikes on jobs, and the impact of company profit-taking on inflation.

Powell said the Fed would be prepared to increase the pace of rate hikes if the “totality” of incoming data ahead of the Fed’s next rate-setting meeting in two weeks “indicate that faster tightening is warranted.”

Message to markets

Biden administration officials said they were not surprised by Powell’s comments and understood he was sending a strong message to financial markets that the fight against inflation is not over. Biden himself has repeatedly hailed progress in easing inflation while acknowledging more work is needed.

“The Fed is independent and we do not comment on their policy,” White House press secretary Karine Jean-Pierre told reporters, when asked about Powell’s remarks Tuesday. She said Biden “believes that it’s important to give the Fed the space needed to make decisions on monetary policy.”

White House economists see recent moderation in inflation and strong jobs data as “evidence that the president’s economic plan is working,” she said. “That’s what we’re focused on.”

The February jobs report scheduled for Friday could provide more clues about future Fed actions after January’s monthly employment report showed blisteringly fast job growth and sustained wage inflation, followed by strong reads of consumer spending and business activity.

Treasury Secretary Janet Yellen and other administration officials have noted the January data may have been influenced by unseasonably warm weather and other factors.

Since last March, the Fed has raised rates from near zero to the current range of 4.50-4.75% to bring inflation down from 40-year highs hit in mid-2022. It slowed the pace of increases to a quarter percentage point at its last meeting after a string of outsized increases through much of last year, but analysts say it may have to go back to half-percentage point hikes.

(Reporting by Andrea Shalal; Editing by Heather Timmons, Deepa Babington and Chris Reese)