Summary:
Arthur Hayes suggests the Fed cut rates to support Kamala Harris' presidential campaign.
The US economy is strong, with GDP growth around 2% and low unemployment.
Hayes questions the need for a 0.5% rate cut, the largest since March 2020.
He warns that this rate cut could lead to accelerated inflation post-election.
Fed's Surprising Rate Cut
BitMEX co-founder Arthur Hayes has shared his thoughts on the Federal Reserve's recent decision to cut interest rates by 50 basis points. He believes this move is strategically aimed at bolstering Kamala Harris' presidential campaign.
In a recent interview with Cointelegraph, Hayes stated that Fed Chair Jerome Powell and Treasury Secretary Janet Yellen are collaborating to enhance the prospects of Harris succeeding in the upcoming presidential election. He elaborated,
"I have a macro view that Jay Powell and Janet Yellen want to juice financial markets to help Kamala Harris win the election. This aligns with the thesis that the US economy is currently extremely strong."
Current Economic Landscape
Hayes pointed out that the GDP growth for the third quarter was around 2%, coupled with historically low unemployment rates. He questioned the rationale behind the Fed's rate cut, especially when the economy seemed to be thriving:
"Why is the Fed cutting rates? It seems like the current rate regime was perfectly fine with a growing US economy. So, what was so bad that they needed to cut 0.5% â the largest rate cut since March of 2020?"
He posits that the intention behind this rate reduction is to elevate market performance, making citizens feel wealthier as they head to the polls in November.
Consequences of the Rate Cut
However, Hayes warns that this aggressive rate cut could lead to accelerated inflation, which Americans will inevitably feel post-election. He questioned the logic of making borrowing cheaper amidst concerns about reckless government spending:
"Inflation is going to accelerate after this point because if people have been saying that the US government has been recklessly spending money, how does making it cheaper for them to borrow help that position?"
Further Insights
For more insights, check out the video interview where Hayes dives deeper into these topics.
Disclaimer: The opinions expressed in this article are not investment advice. Investors should conduct their own research before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets.
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