Economist Peter Schiff Discusses Possibility of Fed Rate Cut in March
Date: 2024-02-02 Author: Dima Zakharov Categories: BUSINESS
Federal Reserve's Policy and Inflation
Economist Peter Schiff has shared his insights on the U.S. economy, Federal Reserve policies, and the likelihood of an interest rate cut in March through a series of social media posts this week. The Federal Reserve recently decided to keep interest rates unchanged, with Chairman Jerome Powell indicating that the Federal Open Market Committee (FOMC) is not planning to lower rates in March. Commenting on Powell's statement, Schiff expressed his view.
Powell's Shift in Stance
By removing the question of a rate cut in March from the table, Powell may have actually increased the chances of the Fed implementing its first rate cut in March. This is because, with the stock market no longer relying on Powell's support, pressure may mount on him to once again back it.
In another post, Schiff pointed out, "Powell referred to the fact that actual rents are rising more slowly than the equivalent rents of owners as a reason for optimism about reduced inflation. However, he completely ignored the fact that actual rents have been rising much faster than owners' equivalent rents when he mistakenly claimed that inflation's rise is temporary."
He added, "Powell stated that if inflation falls below 2%, the Fed will have to do something about it. In other words, despite inflation being significantly above 2% for several years, the Fed won't tolerate any period when it's below 2%. That's the entire inflation policy, which averages 2% over time."
Schiff further noted, "The Fed officially announced that it has stopped raising rates but has lowered expectations for when it will start cutting. It's interesting to see how long it will take for the financial community to realize how severe the recession might be or how serious the inflation problem could become."
