Elon Musk Calls for a 0.25 Percent Fed Funds Rate Cut a Day After Inflation Data Spooked Market

By Benzinga
Benzinga
Benzinga
September 15, 2022 Updated: September 15, 2022

Tuesday’s inflation data triggered a steep sell-off in equities and other financial assets.

What Happened

Ahead of the August inflation report, Ark Invest founder Cathie Wood made an argument for an impending deflation through a series of tweets.

To prove her point, she listed a number of commodities whose prices had significantly decreased from their pre-COVID levels. Lumber prices were down 60 percent, copper by 35 percent, oil by 35 percent, iron ore by 60 percent, DRAM by 46 percent, corn by 17 percent, Baltic freight rates by 79 percent, gold by 17 percent, and silver by 39 percent, she noted.

Tesla Inc. CEO Elon Musk chimed in with his thoughts on Wood’s tweet. “Exactly, this is neither subtle nor secret,” Musk tweeted.

Musk even has a solution for the predicament.

When asked what the Fed should be doing, he said that it should decrease the fed funds rate by 25 basis points.

Why It’s Important

Musk’s statement comes a day after the U.S. released its consumer price inflation report for August, which showed a more-than-expected annual pace of 8.3 percent.

The views of Wood and Musk were echoed by Empire Financial Research’s Whitney Tilson.

“I’m surprised the number wasn’t lower, as extensive data and anecdotes show that inflation is falling fast. It makes me suspect that there’s a lag effect in the data the Bureau of Labor Statistics is collecting,” the analyst said in his daily newsletter.

By Shanthi Rexaline

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