Elon Musk urges the Fed to reverse course in its inflation fight, as he fears the banking crisis is hitting the US economy

• Elon Musk wants the Fed to reverse course in its inflation fight as the banking crisis rages on.

• The Tesla CEO says the US central bank should cut interest rates by 50 basis points this week.

• Musk has warned overly high rates may plunge the US economy into a deep and prolonged recession.

Elon Musk has urged the Federal Reserve to beat a retreat in its battle against inflation, as the banking crisis is already putting the squeeze on the US economy.

"Fed needs to drop the rate by at least 50bps on Wednesday," he replied to a tweet by Bill Ackman on Monday that proposed the Fed pause its interest-rate hikes for now.

The central bank has lifted rates from nearly zero to upwards of 4.5% over the past year, in an effort to slow the pace of price increases. Traders mostly expect it to increase them again, by 25 basis points, at the end of its two-day meeting that starts Tuesday.

Ackman, the billionaire investor who helms Pershing Square, noted that three US banks have shut down in the past two weeks. He argued that has tightened economic conditions, and more rate increases would put strain on the financial system.

Musk — the CEO of Tesla, Twitter, and SpaceX — has also endorsed Ackman's call for the Federal Deposit Insurance Corp. to guarantee US bank deposits above the current cap of $250,000.

"Absolutely required to stop bank runs," the tech executive tweeted on Monday, in response to news reports that the FDIC is considering raising its insurance ceiling.

Musk warned over the weekend that allowing more regional banks to fail posed a "serious risk" of a follow-up to the Great Depression.

The electric-vehicle pioneer has repeatedly criticized the Fed's rate hikes and called for them to be reversed. He's  noted that higher rates effectively make cars more expensive for consumers, as they translate into larger monthly car-loan payments. As a result, Tesla has to cut prices just to maintain demand levels.

"The Fed is operating with way too much latency in their data," he tweeted recently, suggesting official inflation measures don't reflect the current economic reality. "Rates need to drop immediately."

Musk has gone as far as blaming the $600 billion plunge in Tesla's market capitalization last year on rising rates. He's also cautioned that excessively high rates are paving the way for an 18-month-long recession in the US.

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