Elon Musk slams the Fed’s tightening campaign again: The higher the rates, the harder the fall

Elon Musk once again questioned the Federal Reserve’s tightening campaign. The central bank has suggested keeping interest rates high this year despite fears of a US recession.

On Twitter, Musk referred to the ultra-low interest rate regime that surged in the decade after the 2008 financial crisis, tweeting, “What would have happened in 2009 if the Fed had hiked rates instead of cutting them?” bottom. price driven.

“The higher the rate, the harder it is to go down,” he added.

The Federal Reserve (Fed) has raised borrowing costs from near zero to around 4.5% in 2022 to curb inflation, which reached a 40-year high last summer.

Stocks tend to fall when the Fed tightens policy. This is because rising interest rates erode future cash flows that are part of a company’s valuation.

The benchmark S&P 500 is down 19% in 2022, while the tech-heavy Nasdaq Composite plunged 32%.

Tesla has more than offset those losses, with its stock plummeting 64% since the beginning of last year. Musk is the CEO of an electric car manufacturer.

This isn’t the first time the world’s second richest man has criticized his Fed rate hikes.

Last month, he blamed the Fed for Tesla’s stock market crash, saying that putting money in savings accounts could give people a higher return when interest rates rise, making them less willing to buy stocks. pointed out. “Tesla is performing better than ever!” Musk tweeted on Dec. 19, in response to shareholders who blamed him for the collapse of the company’s $600 billion market cap last year.