Veteran trader Peter Brandt has lauded the Federal Reserve for its hawkish stance as he believes there is nothing more destructive to wealth than inflation.
"The U.S. Fed was negligent for not aggressively raising rates in early 2021," he said in his tweet. Brandt “congratulated” the Fed in a tweet for wanting to “remain hawkish.”
“The market is concerned about unemployment and possible recession. Those are the least of our worries. There is NOTHING more destructive to wealth than inflation.”
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Federal Reserve Chair Jerome Powell has asserted there need to be two more rate hikes to bring inflation under control.
"A strong majority of committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year," Powell said Thursday, talking about the policy-setting Federal Open Market Committee, according to a Bloomberg report. "Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go," he said.
Powell also highlighted the lag in the effects of rate hikes and said although the impact is seen in policy-sensitive sectors, it will take time for the full effects of monetary restraint to be realized, especially on inflation.
Hawkish Stance: Brandt believes higher unemployment is the least of the concerns at the current juncture and that the central bank must take precautions to keep inflation away.
"The Fed must keep their feet to the floorboard to prevent a re-occurrence of inflationary pressures. While the Fed was asleep at the switch in 2021, increasing rates another 100 basis points would do wonders to protect the nation’s wealth. Again, higher unemployment is the least of our worries," Brandt said.
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