Billionaire investor Barry Sternlicht calls Fed rate hikes ‘suicide’

Billionaire investor Barry Sternlicht doubles down on his criticism of the Federal Reserve’s interest rate hikes that aim to reduce inflation.

“It’s self-inflicted suicide”, Sternlicht Told CNBC Thursday. “It’s a terrible idea, and it’s not necessary. The economy is slowing down on its own.

He argues that raising interest rates at this point will only slow the economy rather than reduce inflation, which is already falling. He wants the Fed to stop raising interest rates, citing as evidence of a sluggish economy, rising consumer debt and falling rents.

“Inflation is falling hard”, Sternlicht said. “And it’s going down a lot faster than I think people thought.”

In June, US inflation hit a four-decade high of 9.1% year-on-year, before slowing to 7.7% in October. In an effort to control inflation, the Fed has raised interest rates six times this year, bringing the federal funds rate to a range of 3.75% to 4%.

Sternlicht has previously criticized Fed rate hikes. Last month he Told Fortune that continued increases could threaten capitalism.

“So the rich guy who loses 30%, he’s still rich, right? But the poor guy who works by the hour and loses his job, he’s going to say, ‘Capitalism is broken, it didn’t work for me. I lost my job. And this whole system has to go,” Sternlicht said at the time.

He added: “You are going to have social unrest. And that’s just because of Jay Powell and his merry band of lunatics.

On Thursday, Sternlicht said what the Fed is doing now is “disrupting” the economy’s future growth because companies won’t build factories or invest in real estate, things that fuel economic growth. ‘economy.

“The Fed doesn’t seem to understand the ramifications of what it’s doing… It’s the pace, it’s not the level. It’s the fact that it’s made the fastest rise in history and destabilized markets that can’t react,” he said, likely referring to Fed Chairman Jerome Powell.

Sternlicht is not alone in criticizing the Fed for its aggressive rate hikes. Prominent economist Jeremy Siegel ripped the Fed for “slamming the brakes way too hard” by raising rates. Others like Mohamed El-Erian, chief economic adviser to the international financial services provider Allianzhave criticized the Fed for waiting too long to counter high inflation.

But with the latest inflation data and the year-over-year consumer price index rising 7.7% slower than expected, some believe the Fed may have enough ammunition to slow rate hikes.

Our new weekly newsletter Impact Report will examine how ESG news and trends are shaping the roles and responsibilities of today’s leaders, and how they can better meet these challenges. Subscribe here.