Ark Invest CEO Catherine Wood wrote an open letter asking the U.S. Central Bank to cease raising interest rates following the UN Conference on Trade and Development’s (UNCTAD), report. Wood says that the “unprecedented 13-fold increase in interest rates” has not only shocked the world but it’s also pushing the economy toward risking a “deflationary bust.”
Ark Invest’s Catherine Wood Says Fed’s Last 75bps Rate Hike Was ‘Surprising,’ Letter Says 13 to 16-Fold Increase in Benchmark Bank Rates Is Risky
Ark Invest CEO Catherine Wood has published an open letter to the Federal Reserve which notes that the central bank’s aggressive benchmark bank rate hikes have been risky. Wood’s letter says the “Fed’s last decision to increase the Fed funds rate by 75 basis points was surprising.”
Wood’s letter says that the Fed’s concept of reducing upstream price deflation is “likely to turn into downstream deflation.” Furthermore, the Ark Invest CEO says that the Fed’s decisions are based on two “lagging indicators,” which include the inflation rate and employment metrics.
Following the publication of a report by UNCTAD, the CEO sent a letter to his chief executive officer. UNCTAD also called for the Fed’s decision not to increase rates. UNCTAD has estimated that with every Fed rate increase, the GDP of rich countries falls by 0.5%, while it drops by 0.8% in poorer countries for three years.
Both Wood’s and UNCTAD’s complaints are also akin to the criticism the Federal Reserve has received from U.S. Senator Elizabeth Warren, D-Mass. Warren expressed concern about Fed raising federal funds rate. She further talked with CNN. Warren said at the time she was “very worried” that the Fed’s rate hikes will fuel a U.S. recession.
Ark Invest’s Wood believes that the rate hikes could cause a deflationary spiral. “Could it be that the unprecedented 13-fold increase in interest rates during the last six months––likely 16-fold come November 2––has shocked not just the US but the world and raised the risks of a deflationary bust?” Wood asks in the open letter to the Fed published on Monday.
What do you think about Ark Invest CEO Catherine Wood’s letter to the Federal Reserve concerning the recent rate hikes? Please comment below to let us know your thoughts on this topic.
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