Elon Musk Cautions Fed On Further Interest Rate Hikes: 'Quite A Serious Danger' Of Crushing Stock Market

Bibhu Pattnaik
·2 min read
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Tesla Inc CEO Elon Musk raised concerns about the Federal Reserve increasing the interest rate by saying it could crush the stock market.

During Tesla's fourth-quarter earnings call last week, Musk said he's worried that rates will soon exceed the average return of the S&P 500 if the Fed pushes interest rates past 6%, reports the Business Insider.

"I think the Fed needs to be very cautious about having a Fed rate that potentially exceeds 6%," BI quoted him saying during the earnings call.

"Why don't you essentially put your money in T-bills or savings account instead of in the S&P 500, if the S&P 500 is variable and the bank interest rate is not?" he said. "The Fed is at risk of crushing the value of all equities. Quite a serious danger."

In a recent Tweet, Musk said that with rising interest rates, the Fed is increasing its monthly payments for anything bought with debt.

Also Read: Elon Musk Testifies He Could Have Taken Tesla Private With Funds From SpaceX In 2018

After reducing interest rates to 0-0.25% in the aftermath of the COVID-19 outbreak in early 2020, the central bank began hiking rates in March 2022.

The Fed rate is currently at 4.25%-4.50% after a cumulative 425 basis-point increase.

Last week, Musk took to Twitter to recall the Federal Reserve lowering interest rates in the aftermath of the 2007-09 Great Recession.

He recounted how his flagship electric vehicle venture received timely help during that time period.

Last year, Musk warned that another interest rate hike by the Fed could result in deflation hitting the economy.

Bank of America has also warned of the economy potentially falling into a recession in 2023.

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This article originally appeared on Benzinga.com

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