Elon Musk urges Fed to cut rates 'immediately,' or risk severe recession
Twitter chief takes another shot at US central bank over economic concerns
Revere Securities non-executive chairman Kyle Wool discusses whether the Fed will continue to aggressively hike rates at December's FOMC meeting on 'Varney & Co.'
Elon Musk called on the Federal Reserve to cut interest rates as soon as possible, warning that its aggressive tightening campaign this year raised the likelihood of a deep and painful downturn in the U.S. economy.
In a tweet early Wednesday, the Tesla CEO and Twitter chief urged the central bank to reverse course on concerns the economy is headed for a recession in 2023.
"Fed needs to cut interest rates immediately," Musk tweeted. "They are massively amplifying the probability of a severe recession."
This is not the first time that Musk has taken a shot at the U.S. central bank, which is trying to rein in stubbornly high inflation that is still running near the hottest pace in four decades.
THESE BUSINESS TITANS ARE SOUNDING THE ALARM OVER THE US ECONOMY
Tesla CEO Elon Musk called for more drilling and fossil fuel resources on Monday, August 29, 2022, warning humanity could be 'in trouble' if exploration is curtailed. (AP Photo/Jae C. Hong, File / AP Newsroom)
The wealthiest man in the world first expressed concern in September that the Fed risks the possibility of deflation – a sudden plunge in prices and consumer spending – with its rapid rate hikes, and called on policymakers to cut rates by 25 basis points.
One month later, Musk criticized the central bank again, saying that officials are "looking at the rearview mirror instead of looking out the front windshield" by relying on outdated economic data that may not reflect the current health of the economy.
He has described the economic backdrop as "dire," and said that Twitter faces a "challenging economic climate" in an email to staff.
Fed policymakers have already approved six straight rate hikes, lifting the benchmark federal funds rate well into restrictive territory in the span of just nine months. However, in recent weeks, policymakers have signaled an appetite to slow the pace of increases in order to better assess their impact on the economy.
Fed Chairman Jerome Powell is delivering a speech on Wednesday afternoon at the Brookings Institution in Washington, during which he is widely expected to shine light on the central bank's upcoming plans for monetary policy.
Federal Reserve Chair Jerome Powell speaks during a news conference on interest rates, the economy and monetary policy actions, at the Federal Reserve Building in Washington, D.C., on June 15, 2022. (Photo by Olivier Douliery/AFP via Getty Images / Getty Images)
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Musk is just one of many CEOs to sound the alarm over the deteriorating U.S. economy. JPMorgan Chase chief Jamie Dimon, Goldman Sachs CEO David Solomon and Amazon founder Jeff Bezos have all expressed concern that the U.S. is headed for a recession as a result of higher interest rates.
Economic growth already contracted in the first two quarters of the year, with gross domestic product – the broadest measure of goods and services produced in a nation – shrinking by 1.6% in the winter and 0.6% in the spring. However, it rebounded over the summer, with GDP growing by 2.6% on an annualized basis in the three-month period from July through September.