The Fed's hawkish posture, however, is being questioned by Catherine Wood of ARK Investments. She asserts in an open letter that the Fed's policy recommendations will cause deflation. Not only Wood, but other renowned individuals also have a grave deflation warning. Similar remarks criticising the central bank's restrictive monetary policy have been made by Tesla CEO Elon Musk.
To fight American inflation, the Federal Reserve is tightening monetary policy quantitatively. The Fed has all but guaranteed a global stock market catastrophe by taking this action.
The Fed's hawkish posture, however, is being questioned by Catherine Wood of ARK Investments. She asserts in an open letter that the Fed's policy recommendations will cause deflation. Not only Wood, but other renowned individuals also have a grave deflation warning. Similar remarks criticising the central bank's restrictive monetary policy have been made by Tesla CEO Elon Musk.
Pressure on the Fed increases
The Federal Reserve seems unwavering in its opposition to inflation. Jerome Powell, the head of the Fed, emphasised the significance of containing inflation before it becomes entrenched into ordinary. His major objective is to get inflation down to less than 2%. Additionally, he foresaw future suffering for households and enterprises.
Market participants, however, were unimpressed with the monetary policy of the central bank. Similar to how it delayed a changeover to quantitative tightening, experts are criticising the bank for delaying a pivot to quantitative easing. In addition, concern over financial instability around the world is growing.
The US currency has gotten stronger due to the Fed's aggressive approach. The economy of other countries have been severely harmed. The World Bank and the United Nations have warned central banks of an upcoming recession in announcements. A change of course by the US central bank is still unlikely, though.
Cathie Wood Issues Deflationary Alert
Wood questions the direction of Fed policy. She emphasises how the Fed decided on four straight 75 bps rate hikes. She is also concerned by the Fed officials' unanimous support for quantitative tightening. Members who are dovish and hawkish have adopted a combative attitude.
She asserts that commodities prices serve as early warning signs of inflation. She emphasises that, with the exception of food and energy, commodity prices are decreasing year over year. She asserts that the Fed's efforts are excessive and unneeded as a result.
