You can’t cut rates when you have inflation.
Hedge fund billionaire David Tepper said the Federal Reserve could cut rates a bit more, but then risks more inflation and other dangers to the economy and markets if the central bank goes further than that.
In other words, be careful what you wish for.
“If they go too much more on interest rates, depending what happens with the economy … it gets into the danger territory,” Tepper said on CNBC’s “Squawk Box” Thursday. “You’ve got to be careful not to make things too hot.”
His comments come after the central bank lowered interest rates by a quarter point Wednesday, the first cut this year, while signaling two more reductions are coming this year. Fed Chair Jerome Powell characterized the cut as “risk management” rather than something more directed at shoring up a weak economy. President Donald Trump has been pressuring the chief to slash the fed funds rate quickly and aggressively.