The past week was a rollercoaster ride for the financial world. From Elon Musk‘s dire warnings about the U.S. debt to Jerome Powell‘s firm stance on interest rates, the week was filled with significant events that could shape the future of the global economy. Here’s a quick recap of the top stories.
Musk Warns Of ‘De Facto’ Bankruptcy
Billionaire entrepreneur Elon Musk, CEO of Tesla Inc., raised concerns about the U.S. fiscal outlook. Musk warned that the U.S. is on the brink of “de facto bankruptcy” as the federal debt surpasses $37 trillion, with interest payments now accounting for a quarter of all tax revenue.
Powell Holds Steady On Interest Rates
Federal Reserve Chair Jerome Powell defended the decision to keep interest rates unchanged, citing easing inflation and trade and geopolitical risks. Despite three consecutive months of positive inflation data, Powell stated that inflation is still running somewhat above the Fed’s 2% longer-run objective.
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Swiss Interest Rate Hits Zero
The Swiss National Bank cut its benchmark interest rate to 0%, the lowest level since 2022. This move amplifies the gap between U.S. and Swiss rates to record highs, influenced by declining inflationary pressure and a deteriorating global economic outlook.
Rate Cut Odds Amid Middle East Tensions
Economist Jon Faust, a former senior advisor to Fed Chair Jerome Powell, suggested that the ongoing conflict in the Middle East could significantly alter the equations surrounding a rate cut. Faust believes that the Israel-Iran tensions could potentially tip the U.S. economy into a slowdown.
Powell Blames Tariffs For Inflation
Jerome Powell, during his press conference, attributed the rise in the inflation median forecast to the effects of tariffs. This statement has left analysts divided, with some believing that the central bank is overplaying the inflation story.
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This story was generated using Benzinga Neuro and edited by Ananya Gairola
Photo courtesy: Shutterstock
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