Opinion

FED’s Interest Rate Hikes Could Bring On A Severe Recession, Claims Elon Musk

Author: Elena R

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Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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Every other day, Elon Musk is making headlines. With his recent purchase of Twitter, the firing of the majority of the employees, and most recently, his conflict with Apple, the Tesla CEO has been the talk of the town for a while now.

Musk has likewise regularly expressed an interest in toying around with the cryptocurrency markets. 

Here’s his latest opinion on the Fed’s decision to hike interest rates! 

In 2023, Elon Musk predicts a “severe recession” will hit the world. In response to a tweet about a recession forecast, He suggested that the Fed should drop interest rates “immediately” to stop the recession. According to Musk, the “probability of a severe recession” is significantly amplified by the Fed’s increasing interest rates.

This was in response to two Federal Reserve officials who stated on Monday that they favour hiking the Fed’s key interest rate to approximately 5% or more and maintaining it at its highest level into next year, which is longer than many on Wall Street had anticipated.

Many consumer and commercial loans are influenced by the Fed’s benchmark rate, and its aggressive series of hikes has made most loans throughout the economy significantly more expensive. This is especially true for mortgage rates, which have soared substantially in the last year and have severely hindered home sales. 

The overnight borrowing rate is now in the target range of 3.75 to 4 percent after the Fed increased its policy rate by 375 basis points this year. As it attempts to control inflation that is stubbornly high, this is the fastest pace of tightening since the early 1980s. Inflation is currently running more than three times above the Fed’s target.

Musk isn’t the first to suggest a reduction of the interest rates. Several other analysts and leaders have also held a similar opinion on this issue. 

Cathie Wood of Ark Investment Management asserted in an open letter to the government on Monday that the Federal Reserve is probably wrong to take such a severe stance against inflation. The Fed is not the only one raising interest rates.

In September, about 40 central banks across the world approved increases, and the markets largely anticipated all of the Fed’s actions. Recently, though, there has been criticism that the Fed might be going too far and running the risk of pushing the economy into an unnecessary recession.

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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