Peter Schiff Slams Fed's Blind Spot: Jerome Powell 'Looking Through' Soaring Inflation While Policy Remains 'Far Too Loose'
Economist Peter Schiff criticizes the Federal Reserve for underestimating inflation, claiming that Fed Chair Jerome Powell is "looking through" rising prices while keeping policies too loose. Schiff argues that tariffs will contribute to higher inflation, necessitating rate hikes. This follows the Fed's decision to maintain interest rates at 4.25%-4.50%. Schiff's hawkish stance contrasts with Trump's call for aggressive rate cuts. Despite the Fed's steady rates, the S&P 500 and Nasdaq have seen significant year-to-date gains.
Economist Peter Schiff is criticizing the Federal Reserve for its handling of inflation, arguing that the central bank is underestimating persistent price pressures.
What Happened: On Thursday, in a post on X, Schiff said that “the biggest takeaway” from Fed Chair Jerome Powell’s post-meeting press conference was his admission that the central bank was already “looking through persistent and rising above-target inflation,” but wasn’t raising the rates.
According to Schiff, President Donald Trump’s tariffs will be just “one of several factors leading to much higher inflation,” and as a result, he believes that “Fed policy is far too loose,” suggesting the need for rate hikes.
With tariffs expected to push consumer prices higher, economists like Schiff believe that the Fed’s decision to ease monetary policy too soon might further entrench price instability.
Why It Matters: This comes following the Fed’s July Federal Open Market Committee (FOMC) meeting on Wednesday, when it decided to hold the benchmark interest rate unchanged at 4.25% to 4.50%.
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While Schiff pushes for a hawkish stance with a rate hike, Trump has been batting for aggressive rate cuts for the past several months, demanding rates as low as 1%.
Over a month ago, Powell had told Congress that its near-term policy uncertainty revolves almost entirely around Trump’s tariffs. “Increases in tariffs this year are likely to push up prices and weigh on economic activity,” he said, adding that the Fed was monitoring inflation pass-through to consumers.
Others, such as Louis Navellier, the founder and chief investment officer at Navellier & Associates, have criticized the Fed for not cutting rates fast enough.
“The Fed lives in a delusional world. They're not reading the data,” he said, citing a weakening economy and five straight months of inflation coming in below expectations.
Price Action: Even as the Fed holds interest rates steady for the fifth consecutive meeting, the S&P 500, tracked by the SPDR S&P 500 ETF Trust SPY and the Invesco QQQ Trust QQQ, which tracks the Nasdaq, are both up 8.11% and 10.74% year-to-date, respectively.
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