Elon Musk has called on the Federal Reserve to cut interest rates as soon as possible, warning its aggressive hikes this year have dramatically increased the risk of a deep 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 skyrocketed to 40-year highs this year, prompting 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 increase upward pressure on prices but can also sap growth and increase unemployment.
Musk has previously warned the US economy is set 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.
