Elon Musk As Fed Chair? Former Fund Manager Asks Tesla CEO To Take Up Powell's Role And 'Whip Financial Books Into Shape'

Zinger Key Points
  • Fed Chairman Jerome Powell has hinted that no rate cuts may be forthcoming over the next couple of years.
  • The market has largely ignored the message and has continued it with its upward trajectory.

The Federal Reserve chose to pause at the June meeting, but the post-meeting policy statement, the dot-plot graph, and Chair Jerome Powell‘s press conference all carried a hawkish undertone. 

What Happened: Genvieve Roch-Decter, a former fund manager and CEO of financial media company Grit Capital, raised concerns about Powell’s credibility, pointing out the Fed’s inaccurate inflation forecasts over the past two years.

“Now he's [Powell] saying rate cuts aren't going to happen for another couple [of] years. Can we really depend on these projections anymore?” she tweeted.

In response, Tesla CEO Elon Musk bluntly stated, “He [Powell] is wrong.”

Roch-Decter asked Musk if he would take on the role of Fed chair for a year to rectify the situation. “Whip the financial books into shape!”

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Why It's Important: The Fed’s handling of the current monetary policy cycle has drawn widespread criticism. It’s been argued that the central bank was slow to address inflation, which emerged after implementing substantial monetary and fiscal stimuli to revive COVID-19-impacted economies worldwide.

When the Fed eventually intervened, it aggressively raised the Fed funds rate from 0-0.25% to 5-5.25% between March 2022 and May 2023, reaching a 16-year high. Economists have expressed concerns that the Fed may not fully consider the delayed impact of consecutive rate hikes.

The hawkish tone of the June meeting has unsettled economists and analysts expecting a second-half recession. They believe the Fed’s stance is worsening the situation instead of improving it.

Interestingly, the market largely shrugged off the Fed’s hawkishness and rallied strongly on Thursday. Future Fund’s Gary Black said, “Imagine being Fed Chair Jerome Powell, with a hawkish Fed statement, hawkish dot plot, and hawkish scripted comments, and investors saying: We don’t believe you Jay.”

Who Can Be Fed Chair? Although Roch-Decter’s request might have been in a light vein, the Federal Reserve Act mandates that the chair possess “tested banking experience.” This has been interpreted to require familiarity with banking or financial services.

The Chair and Vice Chair, appointed by the President and confirmed by the Senate, serve four-year terms and can be reappointed. Nominees must already be Board members or appointed concurrently.

Read Next: Hawks Are Circling Wall Street: Two Top Analysts Call For The Fed To Resume Hikes In July

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Posted In: Analyst ColorNewsTop StoriesEconomicsFederal ReserveElon MuskFuture FundGary BlackGenvieve Roch-DecterJerome Powell
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