- According to the United Nations Conference on Trade and Development (UNCTAD) report the U.S. Federal Reserve must not hike rates, Ark Invest CEO Catherine Wood has issued an open letter to the U.S. central bank.
- Wood trusts that the “unparalleled 13-fold hike in interest rates” has not only amazed the world but it is also encouraging the economy towards endangering a “deflationary bust.”
The chief executive officer of Ark Invest, Catherine Wood has issued an open letter to the Federal Reserve which highlights that the central bank’s aggressive benchmark bank rate increase has been dangerous. Wood mentioned in his letter that the final decision to raise the Fed Funds rate by 75 basis points was astonishing.“
Wood also mentioned that the idea of Fed to minimise upstream price deflation is “possibly to change into downstream deflation.” Moreover, the Chief executive officer of the Ark Invest says that the Fed’s decisions are totally grounded on two “lagging indicators,” which add the inflation rate and employment metrics.
The letter by the chief executive officer follows the latest report issued by the United Nations Conference on Trade and Development (UNCTAD) which also wishes to stop the increasing rates by the Fed. UNCTAD calculates that with every Fed rate hike, the economic output of a wealthy country reduces by 0.5% and for much poorer countries it reduces by 0.8% for a time period of three years.
The complaints of Wood as well as UNCTAD are also similar to the critique the Fed has got for the U.S. Senator Elizabeth Warren (D-Mass) Warren criticised regarding the Fed increasing the federal funds rate and she further outlined the issue with CNN. Warren stated that at that time she was very concerned that the increase in rate of Fed will eventually lead to a U.S. recession.
The 13 and 16-fold hike
Ark Invest’s Wood trusts that the rate hikes will eventually result in a slump spiral. “Could it be that unparalleled 13-fold hike in interest rates in the period of the past six months. Possibly 16-fold will come on November 2. It has amazed not only the United States but the whole world and increased the risks of deflationary bust?” Woods questions in the open letter to Fed issued on Monday.
Source: https://www.thecoinrepublic.com/2022/10/11/rate-hikes-can-excite-a-deflationary-bust-ceo-ark-invest/