Economist Peter Schiff says Federal Reserve Chairman Jerome Powell taking the March rate cut off the table “may have actually raised the probability that the Fed will indeed serve up the first rate cut in March.” Moreover, Schiff explained that the Fed’s job is actually to create inflation and then pretend to fight it. “The Fed creates inflation to both enable the federal government to run large budget deficits and to prop up financial markets,” the economist emphasized.
Peter Schiff on Fed Rate Cut and Inflation
Economist and gold bug Peter Schiff shared his perspective on the U.S. economy, the Federal Reserve’s policy, and the likelihood of a March interest rate cut in a series of posts on social media platform X this week.
The Fed decided to leave interest rates unchanged on Wednesday. Federal Reserve Chairman Jerome Powell also indicated that the Federal Open Market Committee (FOMC) won’t cut rates in March. “I don’t think it’s likely that the committee will reach a level of confidence” by the March meeting, Powell said. Commenting on the Fed chair’s statement, Schiff opined:
By taking the March rate cut off the table, Powell may have actually raised the probability that the Fed will indeed serve up the first rate cut in March. That’s because now that Powell has pulled the rug out from under the stock market, he may be pressured to prop it back up.
In another X post, Schiff detailed: “Powell cited actual rent rising more slowly than owners’ equivalent rent as a reason for optimism on inflation coming down. Yet he completely ignored actual rent rising much faster than owners’ equivalent rent when he mistakenly claimed that rising inflation was transitory.”
He added: “Powell claimed that if inflation falls below 2% the Fed would have to do something about it. In other words, despite several years of inflation well above 2%, the Fed won’t tolerate any years where it’s below 2%. So much for the policy of inflation averaging 2% over time.”
Schiff further noted: “The Fed officially let everyone know it’s done hiking rates, but dialed back expectation for when it will start cutting. I wonder how long it will take before the financial community realizes just how bad the recession will be or how much bigger the inflation problem will get.”
Regarding the Fed’s efforts to fight inflation, Schiff wrote on Thursday:
In reality the job of the Fed is to create inflation, then deny it exists, lie about its cause, blame others for the problem, and pretend to fight it. The Fed creates inflation to both enable the Federal Government to run large budget deficits and to prop up financial markets.
