Tesla Inc. CEO Elon Musk He expressed concern that if the Federal Reserve raises interest rates, it could crush the stock market.
During Tesla’s fourth-quarter earnings call last week, Musk said he worried rates could quickly exceed the average return of the S&P 500 if the Fed pushed rates above 6%. report Business Insider.
“I think the Fed needs to be very cautious about having Fed interest rates that could exceed 6%,” BI said in its earnings call.
“If the S&P 500 is floating and the bank rate is not, why not put your money in T-bills or a savings account instead of the S&P 500?” he said. “The Fed is in danger of crushing the value of all stocks. It’s a very serious danger.”
In a recent tweet, Musk said the Federal Reserve is increasing monthly payments on debt purchases as interest rates rise.
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After cutting interest rates to 0-0.25% in the aftermath of the COVID-19 epidemic in early 2020, the central bank started raising rates in March 2022.
Fed rates are now between 4.25% and 4.50% after a cumulative 425 basis points rise.
Musk posted on Twitter last week, recalling that the Federal Reserve cut interest rates after the Great Recession of 2007-2009.
He detailed how his flagship electric vehicle venture received timely support during that period.
Musk warned last year that further interest rate hikes by the Federal Reserve could lead to deflation that would hurt the economy.
bank of america It also warned that the economy could slip into recession in 2023.