Expert: To stop inflation, the Fed would need to hike rates to nearly 6%

Interactive Brokers founder Thomas Peterffy is worried about the higher interest rates coming soon from a Federal Reserve behind the curve on inflation. If the Fed really wanted to stop inflation, it would have to raise rates upwards of 6%, Peterffy says.

Inflation

Brian Sozzi at Yahoo Finance:

“I am worried about high interest rates because the Fed is talking about raising rates to 1% or even 2%. Inflation is 7% — 1% or 2% doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%,” Peterffy said on Yahoo Finance Live.

Peterffy thinks the Fed wouldn’t go that high on rates (yet) as it would add new deficit spending as servicing costs on the country’s ballooning debt would rise. More money would then likely circulate into the economy, and put more upward pressure on inflation, Peterffy reasons.

“I think they [the Fed] are in a box. They can’t raise rates much above 1% or 2%, and inflation can stay up there for a long time and people will get used to that and it will become endemic. So that is the reason for my fears,” added Peterffy.

The Bureau of Labor Statistics’ December CPI reading showed prices rose at a 7.0% year-over-year clip at the end of 2021, marking the fastest increase since 1982… and accelerated from November’s already elevated 6.8% increase.

Within the report, the food at home index rose 6.5% over the last 12 months, compared to a 1.5% annual increase during the last 10 years.

The tech heavy Nasdaq Composite fell into correction territory on Wednesday, defined as a 10% drop from a high.

MacDailyNews Take: Obviously, a healthy U.S. economy, consumer confidence, and consumer spending are essential to Apple, as America is Apple’s largest market, by far.

‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021

Inflation is repudiation. — Calvin Coolidge

When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan

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