Elon Musk Criticizes Fed For Delayed Interest Rate Cuts

Twitter (Now X) Chief Executive Officer, Elon Musk, stated that the Federal Reserve must slash interest rates and he thinks it is silly that the United States central bank hasn’t done it yet.

Musk’s comment, which he made after seeing an update on the social media platform X, came after a lacklustre job report last week. This news made people worry that the Fed kept interest rates high for too long, which could hurt the economy.

Fed Chairman Noted A Rate Cut Could Occur If The US Economy Stays Strong

Policymakers kept the Fed’s main overnight interest rate the same at 5.25%-5.50% last week but said it might be reduced at the September 17-18 meeting. Traders are very sure a cut will surely happen during that meeting.

Last week, Fed Chairman Jerome Powell stated that the central bank might lower rates the following month if the United States economy stays on track as expected. This would bring the central bank close to finishing a fight against inflation that has lasted over two years, but right in the middle of the country’s presidential election.

Powell noted that the question is if all the data, the balance of risks, and the changing outlook match the team’s growing confidence in handling inflation and keeping a strong job market. He added that if this is true, the central bank might lower its policy rate at the upcoming meeting set to be held in September.

Cole Smead, the Chief Executive Officer of Smead Capital Management, noted that as a global market sell-off keeps going because people are scared of a coming U.S. recession, the Fed might not have much choice.

The Fed Aims To Address The Issue Of High Federal Spending On The Deficit

Cole added that the central bank is still trying to deal with the effects of huge financial stimulus, which has made it hard to clearly understand the condition of the economy.

Smead said the Fed is trying to fight a big problem. This problem is a lot of federal spending on the deficit, which is 7% of the U.S. GDP, and It’s really hard to fix a problem like that, especially since the central bank didn’t cause it.

The market crash continued this week, with U.S. futures showing the same losses as Asia and Europe. A weaker employment report for July and a growing unemployment rate made people worry that the U.S. economy might be going into a recession.

The. Central Bank kept rates the same at its meeting last week. However, markets think it may need to act faster and stronger to stop a downturn.