Home / News / World /  Fed needs to cut interest rates immediately to stop a 'severe recession': Elon Musk

Twitter CEO and Tesla co-founder Elon Musk sees a “severe recession" coming our way in 2023. Elon Musk, replying to a tweet on recession forecast, said the Fed needs to cut interest rates “immediately" to halt the recession. Elon Musk said the increased interest rates by Fed are massively amplifying the “probability of a severe recession".

Elon Musk’s prediction on the “severe recession" came as he replied to a tweet that warned about an upcoming slowdown next year. The tweet read: “I am expecting a real economic recession in 2023, be prepare[d] for any macro storm ahead of us."

In reply to it, Elon Musk said the trend was concerning. “Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession."

Meanwhile, Federal Reserve Bank of Boston leader Susan Collins has said that with little evidence price pressures are waning, the Fed may need to deliver another 75-basis point rate hike as it seeks to get inflation under control.

"We're now in a phase where deliberate increments - all of the possible increments - should be on the table as we decide what is sufficiently tight," Collins said, adding, "Seventy-five still is on the table; I think it's important to say that as well."

The Fed has lifted its policy rate more rapidly this year, including four straight 75-basis-point increases that by early this month had brought short-term borrowing costs to a 3.75 per cent-4 per cent range, from near zero in March.

Federal Reserve Bank of Philadelphia leader Patrick Harker has said that the US central bank may be approaching a point where it may be able to moderate the pace of its rate rise which is aimed at lowering too-high levels of inflation.

“In the upcoming months, in light of the cumulative tightening we have achieved, I expect we will slow the pace of our rate hikes as we approach a sufficiently restrictive stance," Harker said.

(With agency inputs)

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