Tesla Motors CEO Elon Musk unveils a new all-wheel drive version of the Model S October 9, 2014 in Hawthorne, California.
Lucy Nicholson | Reuters
Elon Musk believes a recession is looming and fears the Federal Reserve’s attempts to curb inflation could make it worse.
In a tweet early Wednesday, the Tesla CEO and Twitter owner urged the Fed to “cut rates immediately” or risk “increasing the likelihood of a severe recession.”
The remarks came in an exchange with Tesmanian co-founder Vincent Yu, which was attended by several others.
Later in this thread, NorthmanTrader founder Sven Henrich notes that the Fed “has stayed too loose for too long because it grossly misjudged inflation, and now it’s aggressively tightened into the highest-ever debt construct, without considering the lagging effects of these rate hikes they risk would again be too late to see the damage done.
Musk replied, “Exactly.”
This isn’t the first time Musk has warned of impending economic doom.
In a similar exchange on Oct. 24, the world’s richest man estimated a global recession could last “until spring 24,” though noting he was “just speculating.” That prediction came amid a series of economic warnings from other executives, including Amazon CEO Jeff Bezos, JPMorgan CEO Jamie Dimon, and Goldman Sachs CEO David Solomon.
The Fed appears to be entering the late stages of a rate hike campaign aimed at tackling inflation, which is still near its highest level in more than 40 years. The central bank has hiked interest rates half a dozen times this year, bringing the federal funds rate to a target range of 3.75% to 4%, and is expected to hike a few more times before stopping.
In recent days, Fed officials have said they expect hikes to be smaller than the four consecutive 0.75 percentage point hikes, the last of which came in early November. Fed Chair Jerome Powell addresses the public in a speech to be delivered at the Brookings Institution on Wednesday afternoon.
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