- Elon Musk has slammed the Federal Reserve again after it decided to keep hiking interest rates.
- AI chat bot ChatGPT “couldn’t do worse” than Fed chair Jerome Powell, the Tesla CEO joked.
- Musk warned the Fed’s latest decision could make the US regional banking crisis worse.
Elon Musk joked Wednesday that ChatGPT would make a better Federal Reserve chair than Jerome Powell, as the Tesla boss slammed the central bank’s latest decision to raise interest rates to around 5%.
“Couldn’t do worse,” Musk said on Twitter, replying to a user who’d suggested putting the intelligent language bot’s GPT-4 update in charge of the Fed.
The US central bank raised borrowing costs for the ninth time in a row Wednesday, lifting its base rate by 25 basis points as it presses ahead with its war on inflation.
Some of Wall Street’s top analysts had called on the Fed to pause its tightening campaign to support embattled regional US banks. The lenders are still reeling from the collapse of SVB Financial, Signature, and Credit Suisse in recent weeks.
Musk had previously thrown his weight behind a 50-basis-point Fed cut – saying Monday that lower interest rates would be “absolutely required to stop bank runs.”
A run is when a flood of customers rush to withdraw their deposits all at once, putting pressure on a lender’s liquidity.
The Tesla CEO took that stance again Wednesday, saying in another tweet that he thought the Fed’s latest policy decision could spur further outflows from struggling banks.
“A major driver of depositor flight is people moving money from low interest savings accounts to high interest money market (Treasury Bill) accounts,” Musk said.
“This foolish rate hike will worsen depositor flight,” he added.
Bond yields tend to rise when the Fed lifts interest rates, making money market accounts more attractive.
Billionaire boss Musk warned at the weekend that allowing more regional banks to fail posed a “serious risk” of a follow-up to the Great Depression.
Since late last year, Tesla CEO Musk has been criticizing the Fed’s hiking campaign intended to cool inflation running at historic highs. He’s noted that higher interest rates bump up monthly car-loan payments, effectively making it more expensice to buy vehicles.
In December he blamed Tesla’s $600 billion market capitalization wipeout on rising rates. He also predicted that higher borrowing costs could pave the way for an 18-month recession in the US.
Read more: Elon Musk urges the Fed to reverse course in its inflation fight, as he fears the banking crisis is hitting the US economy