In December, Peter Schiff predicted that the Federal Reserve was about to hike rates for the last time and that the next step would be rate cuts. Yesterday, Jerome Powell made comments widely interpreted to signal the rising likelihood of a rate cut. The Fed chair dropped the word “patient” from his vocabulary, saying the central bank would respond as “as appropriate” to the perceived economic impacts of tariffs and other economic data.
Peter appeared on Fox Business Countdown to the Closing Bell with Liz Claman to talk about what’s next up for the Fed and how it will impact the economy.
I don’t think that Powell would even open the door to the possibility of a rate cut if he wasn’t prepared to walk through it.”
Peter said the reason he knew the Fed would end the hiking cycle in December was because the stock market was tanking and he knew the only way the central bank could stop the carnage was to take the rate hikes off the table.
Well, now it’s falling again, and so now all they’ve got left in their quiver is to actually cut rates.”
Claman pointed out that the stock market was popping at the mere suggestion of a rate cut.
“Exactly!” Peter said. “But I think people are wrong if they think it’s going to work again.”
The Fed was able to inflate an enormous bubble with QE one, two and three, and keeping rates at zero for as long as they did. But the next time, it’s not going to work.”
Peter reiterated a point that he made during his podcast last week, noting that bond traders are anticipating a recession. They are betting that the Fed will cut rates during the downturn.
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