Ark Investment Management founder and crypto-enthusiast Katie Wood gave her opinion on the Federal Reserve’s (Fed) interest rate adjustment.
In a series of tweets, Wood said the U.S. central bank is “playing with fire” with planned rate adjustments.
Last month, the Fed changed its interest rate, raising it from 0.25 percent to 0.5 percent. By and large, this doesn’t matter much to most consumers, who are still suffering from epic inflation of nearly 8%.
Two-year bond yields exceeded 30-year yields for the first time since 2007 after the April 1 jobs report. Wood said raising interest rates was a “big mistake.”
“The 10-to-3-month yield curve is steep because the Fed reported aggressive interest rate hikes in the face of supply shock inflation. Inflation is a very aggressive tax that kills purchasing power and consumer sentiment,” she said.
She added that consumer sentiment in America is lower now than it was at the height of the pandemic. She noted the levels that followed the 2008 financial crisis, when inflation and interest rates were in the double digits.
“The economy succumbed to recession in each of those periods. Europe and China are also in dire straits. The Fed seems to be playing with fire,” she added.
Peter Schiff commented on her post, noting that the Fed waited too long to raise rates and added:
“Yes, we are heading toward a recession, but the Fed should still raise rates because inflation will get worse!”.
Wood’s flagship product, the ARK Innovation ETF (ARKK), which invests in leading technology and fintech companies, has fallen 30% since early 2022.