The Fed’s rate of interest hikes this 12 months are “not sustainable,” Starwood Capital CEO Barry Sternlicht advised CNBC this week, saying the collection of will increase are “self-inflicted suicide.”
“This can be a horrible thought, and it’s not mandatory. The economic system is slowing by itself,” Sternlicht advised CNBC’s Squawk Field on Thursday. He mentioned that the influence of the speed will increase might be felt in 2023 as corporations pull again budgets, which can weigh on shares. He additionally mentioned the pullback of capital from investments in new infrastructure and equipments.
That “will gradual the economic system, it can’t do something apart from that,” he advised CNBC.
He additionally opined that the Treasury might have to purchase its personal belongings whereas the Fed continues to try to pump the brakes on the economic system.
“In any other case, rates of interest may get out of hand and also you’re going to have inflation and also you’re going to go proper over the sting as a result of there’s no international progress,” mentioned Sternlicht.
Inflation hit a 40-year excessive in June rising 9.1% year-over-year, earlier than slowing to 7.7% in October.
Sternlicht has repeatedly criticized the Fed this 12 months, telling CNBC in September that the central financial institution was attacking the economic system with a sledgehammer they usually don’t must.”
“I believe the entire dialogue is flawed. I don’t assume we’d like 2% inflation,” Sternlicht advised CNBC in September, including that he thinks inflation ought to run between 3 and 4%. “Inflation that’s triggered by wage progress is fabulous. We must always need wages to go up. That’ll assist social points within the US – it’s the trickle-down we’ve all been ready for.”
