Peter Schiff Warns 25-Basis-Point Hike Would Do 'Nothing': 'They Should Raise Rates By a Lot More'

Investor Peter Schiff said he doesn’t believe the Federal Reserve will raise interest rates next week, arguing that even if it does, a quarter-point move would do nothing to curb inflation in an environment of surging commodity prices.

‘They Should Raise Rates By a Lot More’

“I don’t believe that the Fed is going to hike rates next week,” the investor said on ‘The Peter Schiff Show Podcast’ released on Tuesday, adding that if it does move, “they should raise rates by a lot more” than 25 basis points.

“The real problem is: what does the Fed buy with a 25-basis-point rate hike? Nothing. They’re gonna get nothing from that,” he added.

If the Fed only moves a quarter point, he said, markets will start pricing in the next hike, leaving the Fed to raise rates again and putting it “in the same predicament that it’s in now, only rates will be even higher,” which he said would mean a bigger problem for stocks, real estate and the federal debt.

The National Debt Adds Pressure

“I believe the strategy is to talk about raising rates, act as if you’re going to raise rates, but never actually do it,” Schiff said.

US Treasury interest payments have reached a record $1.2 trillion over the past 12 months, according to Bank of America’s Global Research team, as the national debt surpassed $40 trillion for the first time last month.

Schiff said the figure could approach $2 trillion by the end of President Donald Trump‘s term.

Hike Odds At 60%

The odds of a hike are 60.5% and of a hold 39.5%, according to the CME FedWatch tool, following recent spikes in crude oil and copper prices.

Chief Market Strategist at Wellington Altus James Thorne warned on Tuesday that the Fed risks repeating a 2008-era mistake by hiking rates into an energy-driven price shock.

The Fed will announce its interest rate decision on Sept. 16.

Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) fell 0.1% on Tuesday to close at $92.16 and lost 0.11% in early premarket trading on Wednesday. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed 0.12% at $82.20 and fell another 0.12% in premarket trading.

According to Benzinga edge rankings, iShares 20+ Year Treasury Bond ETF has a Momentum score in the 18th percentile and a negative price trend across the short, medium, and long term.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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