Tesla CEO Elon Musk was one of those who shared his sentiments on the likelihood of a recession next year.
The shares of American multinational electric car manufacturer Tesla Inc (NASDAQ: TSLA) are seeing marginal growth in the Pre-Market today after the stock recorded a bumper session on Wednesday. Investors went on a buying spree pushing the share price to $194.70 atop a 7.67% growth on Wednesday as Federal Reserve (Fed) Chairman, Jerome Powell hinted at the Brookings Institute that the Feds Funds Rate may start seeing smaller increases as early as this month.
The year 2022 has been quite tumultuous for the US Economy as the impacts of the war that broke out in Eastern Europe between Russia and Ukraine exacerbated the lingering pangs from the COVID-19 pandemic era. Inflation started rising in 2020 and while the Fed had placed it under close watch, the war fueled an upshot, necessitating the Federal Reserve to embark on regular interest rate hikes to curtail the growth.
With inflation currently pegged at 7.7% for the 12 months ending in October 2022, the Federal Reserve’s aim to bring this figure down to 2-4% still seems enormous. The Fed has implemented multiple 75 basis points rate hikes this year and industry stakeholders are beginning to worry that a continuation of this bogus rate hike can eventually push the US economy into a full-blown recession.
Tesla Inc’s Chief Executive Officer Elon Musk was one of those who shared his sentiments on the likelihood of a recession next year. Taking to Twitter, his newly acquired social media platform, Musk tweeted saying:
“Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.”
Other key major analysts also shared the sentiment, with a caution on investors to approach the market with care.
Fed Chairman Allays Fears Pushing Tesla Stock Up
The Fed Chairman seems to share similar sentiments as suspected by industry stakeholders. According to him, it will be wise to permit the economy to respond and adjust to the series of interest rate hikes that have been implemented thus far before progressing on an expedited increment.
“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he said in a statement adding that “he time for moderating the pace of rate increases may come as soon as the December meeting.”
This sounds like good music to investors who believe high-growth stocks like that Tesla will be in the pole position to benefit from a tapering interest rate cut. While the entire industry is optimistic about the prospects of the lowered rates, Powell said the Feds still has a long way to go before the headline inflation can be sufficiently reduced below the point at which it can continually be a threat.
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