Elon Musk urges the Fed to cut interest rates, warning its hikes have vastly increased the risk of a serious US recession

Elon Musk has urged the Federal Reserve to cut interest rates immediately.
The Tesla and Twitter CEO said the central bank's hikes have hugely increased the risk of a recession.
Musk recently predicted a severe US recession that will last a year or two.

Elon Musk has called on the Federal Reserve to slash interest rates as soon as possible, warning its rapid hikes this year have dramatically increased the risk of a deep and painful economic downturn in the US.

"Trend is concerning," the Tesla, SpaceX, and Twitter CEO replied on Wednesday to another Twitter user's prediction of a recession next year.

"Fed needs to cut interest rates immediately," Musk continued. "They are massively amplifying the probability of a severe recession."

Inflation has surged to 40-year highs this year, spurring the Fed to hike rates from almost zero in March to around 4% today, and signal rates could peak above 5% next year. Higher interest rates discourage spending, borrowing, and hiring, which alleviates upward pressure on prices but can also sap growth and increase unemployment.

Musk has previously warned the US economy is poised to shrink. "There's going to be probably a year or two of serious recession," he said during his first meeting with Twitter employees earlier this month.

He described the economic backdrop as "dire," and said Twitter faces a "challenging economic climate," in an email to Twitter staff.

The billionaire technology executive bemoaned excessive rate hikes during Tesla's third-quarter earnings call in October.

"The Fed is not listening, because they're looking at the rearview mirror instead of looking out the front windshield," he said, meaning that the central bank is too focused on lagging economic data instead of current conditions.

Musk is one of several corporate bosses to sound the recession alarm in recent weeks. Amazon founder Jeff Bezos, JPMorgan CEO Jamie Dimon, and Goldman Sachs CEO David Solomon have all issued grim economic outlooks.

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Contributer : Business Insider https://ift.tt/PaYhtIF

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