Thomas Peterffy, founder and chairman of Interactive Brokers and known as the father of high-frequency trading, said on Wednesday that he was worried about the prospect of damaging inflation in the US.
The latest data show that US CPI growth in April was much higher than market expectations and reached its highest level since the financial crisis. In this connection, Peterffy said:"whenever I hear such numbers, I think back to my childhood in Hungary, when I was playing with 1 billion forint notes, so the value of money is meaningless. "
"I am very worried that this will be an unstoppable situation, because the longer the Fed waits, the more they will have to raise interest rates."This could, in turn, make debt repayment by the US government more challenging, Peterffy added. "so we're basically drawing ourselves into a box, but we don't know how to get out. "
According to the latest figures from the labor department, CPI rose 4.2% in April from a year earlier, the biggest year-on-year increase since September 2008.
One factor to consider when assessing the April CPI data is that the year-on-year increase was affected by the start of the COVID-19 epidemic in 2020. The COVID-19 crisis and its impact on the economy led to the biggest decline in CPI in April 2020 since December 2008.
As a result, Fed officials, including Fed Chairman Jerome Powell, think inflation will look higher this spring because of the so-called base effect. Even so, CPI data released on Wednesday showed monthly growth of 0.8 per cent, well above economists' expectations of 0.2 per cent.
Powell has repeatedly stressed that he believes that price increases during the recovery of the epidemic will be transitional, rather than the beginning of problematic runaway inflation, as the United States experienced in the 1960s and 1970s. That is why Powell and other Fed officials believe it is still necessary to maintain a highly loose monetary policy.
"We are not completely out of the COVID-19 crisis," James James Bullard, chairman of the St. Louis Fed, said on Tuesday. "once we are out of the epidemic, then I think it will be time to see if monetary policy can be changed. "
Peterffy is not the only one who disagrees with what the Fed is doing. Billionaire investor Stanley Druckenmiller also attacked the Fed on Tuesday, saying the Fed's policy of maintaining market and economic stability during the outbreak could eventually threaten the long-term health of the dollar and its status as a global reserve currency.
He said:"in history, I cannot find such a period when monetary and fiscal policy is out of touch with the economic environment. While he has no objection to the Fed's initial actions in response to the epidemic crisis, he said the Fed had been "on the accelerator" for too long.
Edit / Ray