Last Wednesday, as expected by the market, the Federal Reserve remained inactive, and Federal Reserve Chairman Powell subsequently signaled a rate cut for September. But the subsequent release of a series of economic data has raised concerns about a slowdown in the US economy, with some market participants warning that the Federal Reserve has been too slow in cutting interest rates.
Tesla CEO and billionaire Elon Musk issued the latest warning on Sunday. When commenting on Buffett's reduction of stock holdings, he criticized that the Federal Reserve's failure to cut interest rates early was "foolish".
The Federal Reserve needs to lower interest rates, "Musk wrote on X. It's foolish that they haven't done so (cut interest rates) yet
Musk made the above remarks in response to a post on X, which said that Berkshire Hathaway, which was run by billionaire investor Warren Buffett, increased its reserves of cash equivalents and short-term treasury bond bonds after reducing its stock position (including its largest position in Apple).
He (Buffett) clearly expects some form of pullback, or simply believes that there is no better investment than US Treasury bonds, "Musk said.
Obviously, Musk is using Buffett's post of selling stocks to express his dissatisfaction with the Federal Reserve. Musk has called for the Federal Reserve to cut interest rates more than once, as high interest rates have increased the cost of purchasing cars, thereby suppressing demand for Tesla electric vehicles.
The Federal Reserve announced last week that it will keep the target range for the federal funds rate unchanged between 5.25% and 5.5%. This is the eighth consecutive meeting of the Federal Reserve since September last year to keep interest rates unchanged. Policy makers say that US inflation remains above the 2% target.
Powell stated at a press conference after the interest rate meeting that if inflation continues to cool down, a rate cut "could be discussed as early as September".
Last Friday, data released by the US Bureau of Labor Statistics showed that the slowdown in employment in July exceeded expectations, and the unemployment rate rose to its highest level in nearly three years, indicating that the labor market is deteriorating faster than previously expected, exacerbating concerns about an economic recession.
Jeffrey Gundlach, CEO of Double Line Capital and the "new bond king", also commented last week that the Federal Reserve should have started its interest rate cut cycle on Wednesday. Gunlak believes that the US economy is not as strong. The labor market situation is weakening, partly due to the rising unemployment rate. When the Federal Reserve really starts cutting interest rates, it may already be too late.