Tesla CEO Elon Musk was one of those who shared his sentiments on the possibility of a recession next year.
Shares of the American multinational electric car maker Tesla Inc (NASDAQ:TSLA) is seeing a slight uptick in the pre-market today after the stock recorded a bumper session on Wednesday. Investors pushed the stock price up 7.67% to $194.70 on Wednesday as the Federal Reserve (Fed) chairman. Jerome Powell The Brookings Institute indicated that a small increase in the fed funds rate could be seen earlier this month.
The year 2022 has been tumultuous for the US economy as the effects of war in Eastern Europe between Russia and Ukraine added to the lingering pain of the COVID-19 pandemic. Inflation had begun to rise in 2020 and while the Fed kept it under tight watch, the war had spurred an outcome that required the Federal Reserve to regularly raise interest rates to moderate growth.
With inflation currently pegged at 7.7% for the 12 months ending October 2022, the Federal Reserve’s target of bringing this figure down to 2-4% still seems lofty. The Fed has implemented several 75 basis point rate hikes this year and industry stakeholders are beginning to worry that a continuation of this furloughed rate hike could eventually push the US economy into a full-blown recession.
CEO of Tesla Inc. Elon Musk was among those who shared their sentiments on the possibility of a recession next year. Taking to Twitter, his newly acquired social media platform, Musk tweeted saying:
“The trend is concerning. The Fed should cut interest rates immediately. They are massively increasing the likelihood of a severe recession.”
Other leading analysts also shared the sentiment, warning investors to approach the market with caution.
Fed chairman allays fears of pushing Tesla stock up
It appears that the Fed chairman shares the same sentiments suspected by industry stakeholders. According to him, it would be wise to allow the economy to react and adjust to the series of interest rate hikes that have been implemented so far before progressing to an accelerated wage hike.
“It makes sense to reduce the pace of our rate hikes as we approach the level of restraint that will be sufficient to bring down inflation.” Told It said in a statement that “the time to ease the pace of that rate hike may come as early as the December meeting.”
That sounds like good music to investors who believe high-growth stocks like Tesla will be in pole position to benefit from interest rate cuts. While the entire industry is optimistic about the prospects for lower rates, Powell said the Fed still has a long way to go before reducing headline inflation substantially below the point at which it could be a persistent threat. .
Benjamin Godfrey is a blockchain enthusiast and journalist who loves to write about real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain-based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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