Billionaire investor Barry Sternlicht calls Fed rate hikes ‘suicide’
Billionaire investor Barry Sternlicht is stepping up his criticism of the US Federal Reserve’s rate hikes aimed at bringing down inflation.
“This is self-inflicted suicide,” Sternlicht said CNBC on Thursday. “It’s a terrible idea and it’s not necessary. The economy is slowing down by itself.”
He argues that raising interest rates at this point will only slow the economy rather than reduce inflation, which is already falling. He wants the Fed to stop raising interest rates, citing rising consumer debt and falling rents as evidence of a slow economy.
“Inflation is coming down hard,” Sternlicht said. “And it’s coming down a lot quicker than I think people thought.”
In June, US inflation hit a four-decade high at 9.1% yoy, before slowing to 7.7% in October. In a bid to control inflation, the Fed has hiked interest rates six times this year, raising the benchmark interest rate to a range of 3.75% to 4%.
Sternlicht was previously critical of the Fed’s rate hikes. Last month, he said wealth that continued rate hikes could threaten capitalism.
“So the rich guy who loses 30% is still rich, right? But the poor guy who works an hourly job and loses that job will say, “Capitalism is broken, it didn’t work for me. i lost my job And this whole system has to get out the door,’” Sternlicht said at the time.
He added: “You will have social unrest. And it’s all because of Jay Powell and his merry band of lunatics.”
On Thursday, Sternlicht said what the Fed is doing now is “disrupting” future economic growth because companies are not building facilities or investing in real estate — things that drive economic growth.
“The Fed doesn’t seem to understand the implications of their actions… It’s the pace, not the level. It’s the fact that it has made the fastest rise in history and destabilized the markets that can’t react,” he said, likely referring to Fed Chair Jerome Powell.
Sternlicht isn’t the only one to criticize the Fed for aggressively raising interest rates. Prominent economist Jeremy Siegel chided the Fed for “slamming on the brakes far too hard” by raising interest rates. Others, like Mohamed El-Erian, chief economic adviser at international financial services firm Allianz, have criticized the Fed for waiting too long to counter high inflation.
But with the latest inflation data and a slower-than-expected 7.7% yoy rise in CPI, some are speculating that the Fed has enough ammunition to slow its rate hikes.
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