1674977784 Elon Musk warns Fed of more rate hikes fairly serious

Elon Musk warns Fed of more rate hikes: ‘fairly serious risk’ of stock market collapse

Elon Musk warns Fed of more rate hikes fairly serious

Tesla Inc chairman Elon Musk expressed concerns about a rate hike by the Federal Reserve, saying it could destroy the stock market.

During Tesla’s fourth-quarter earnings call last week, Musk said he’s concerned that rates will soon exceed the average yield of the S&P 500 if the Fed hikes rates above 6%, Business Insider reports .

“I think the Fed needs to be very careful about a Fed rate that might exceed 6%,” BI quoted him as saying on the earnings call.

“Why not basically put your money in T-bills or savings accounts instead of the S&P 500 when the S&P 500 is variable and bank rates are not?” he said. “The Fed risks destroying the value of all stocks. A pretty serious danger.”

In a recent tweet, Musk said that as interest rates rise, the Fed increases its monthly payments on anything bought with debt.

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

After cutting interest rates to 0-0.25% following the outbreak of COVID-19 in early 2020, the central bank started raising interest rates in March 2022.

The Fed rate is currently between 4.25% and 4.50% after a cumulative 425 basis point hike.

Last week, Musk took to Twitter to recall that the Federal Reserve cut interest rates after the Great Recession of 2007-09.

He shared how his flagship electric vehicle company received timely help during this time.

Last year Musk warned that another rate hike by the Fed could lead to deflation hitting the economy.

Bank of America has also warned that the economy may fall into recession in 2023.

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This article originally appeared on Benzinga.com

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