In a direct challenge to the current US policy on monetary management, billionaire businessman Elon Musk has called on the Federal Reserve to cut its interest rates, describing current rate policy as stupid. Musk’s tweet on Sunday using X seem to indicate increasing concerns with regards to the policy approach of the Fed.
Musk’s comments come a week after a series of weak economic reports that have amplified concerns that the Fed’s stubborn high interest rate might be depressing growth. Policymakers said in a statement last week that they would leave the Fed’s benchmark overnight interest rate at 5.25%-5.50% range, indicating the likelihood they will cut rates again in September.
Market players are gradually recommending a rate-cut hike during the Fed’s meeting set for September 17-18. This speculation comes as Federal Reserve Chair Jerome Powell hinted on Wednesday that a rate cut might be coming if conditions in the economy are right in the eyes of the Fed. With these remarks, Powell signals that the Fed is almost in the final stretch of its long inflation war but has to maneuver these decisions in the middle of a polarised presidential elections.
Musk’s criticism is characteristic of the disagreements over the efficiency of the Fed in managing the economy. While doubts grow about whether the central bank has set rates too high for too long, the issue returns to whether the expected cuts will do enough to spur activity and avoid an economic slow down.
The actions of the Federal Reserve in the upcoming weeks will be keenly observed by both the trading floor and the White House, with much expectation that a change in policy stance will help to give a fillip to the economy at a time when the country is on the cusp of the election year.
