Cathie Wood warns the Fed is ignoring dangerous signals and risks plunging the US into a recession with its huge rate hikes

Ark Invest CIO Cathie Wood has slammed the Federal Reserve’s aggressive moves to curb inflation, which she says could plunge the US into a recession.

Cathie Wood has warned the Federal Reserve could cause a recession if it keeps hiking interest rates.
The US central bank is ignoring three indicators that might show inflation easing, according to the Ark Invest CIO.
“The Fed seems to be worried more about its legacy than the economy,” Wood said.

Cathie Wood has become the latest high-profile investor to warn of a potential US recession.

The Ark Invest chief investment officer slammed the Federal Reserve in a series of tweets Sunday, arguing that its aggressive rate hikes could trigger an economic slump in the US.

“The Fed seems to be worried more about its legacy than the economy,” Wood said. “It is ignoring deflationary and dangerous signals.”

The US central bank announced it would raise interest rates by 75 basis points last week as it tries to tame inflation, which hit a four-decade high of 8.6% in May. Fed Governor Christopher Waller has refused to rule out further 75 basis point hikes.

But rising interest rates tend to hit economic growth. Borrowing becomes more expensive when rates rise, which causes consumer spending to fall.

Aggressive hikes are unnecessary because inflation is already easing, according to Wood. She pointed to two indicators that could show prices falling without the Fed’s intervention.

First, Wood pointed to the stagnating prices of gold and lumber, which are often seen as leading inflation indicators.

“After soaring from $1,350/ounce pre-COVID to a peak of nearly $2,000 [an ounce] during 2020, the gold price has dropped back to $1,840 [an ounce] during the past two years,” Wood said. “The lumber price has dropped more than 50%.”

Secondly, Wood said …read more

Source:: Businessinsider

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