U.S. inflation is very high and on the rise, said Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management.
In an X post dated July 29, Schiff noted that the Fed may not be able to tame inflation with an increase of 25 or 50 basis points. He basically pointed out that the Fed’s 0.25% to 0.50% rate hike from 3.50% to 3.75% could be accommodating to higher inflation.
“Inflation is too high and trending upward. Even if the Fed raises the federal funds rate by 25 or 50 basis points today, it will be too little, too late to make a difference, as interest rates will remain accommodative,” Schiff said. Highlight.
The expert said that the Fed should reduce its balance sheet and reduce the money supply to confront high inflation. Moreover, the US M2 money supply continued to expand, reaching a new all-time high of more than $23.29 trillion in July, according to official data. Data.
In addition, the Federal Reserve has previously warned that… Amnesty International The boom fueled persistent inflation, as did Feinbold I mentioned. As such, Schiff concluded that the Fed may need to tighten the money supply and reduce its balance sheet.
“The Fed should also reduce the money supply and shrink its balance sheet,” he added.
Schiff warns against attempts to combat inflation
Meanwhile, Schiff emphasized that the worst-case scenario for any anti-inflation attempt by the Fed could be a market collapse.
“Any real attempt to rein in inflation would crush markets and the economy, forcing the Fed to reverse course,” he added. He pointed out.
At the time of this report, traders pegged the probability of a zero Fed rate cut in 2026 at 87.6%, according to Metrics from Polymarket. On the other hand, Polymarket Merchants displays There is a 77% chance that the Fed will raise interest rates this year.
As a result, Schiff believes the Fed is striking a tight balance between controlling inflation and the risk of destabilizing financial markets and economic growth.
