Noted investor, Michael Milken, has predicted that the Federal Reserve will adopt a careful approach to monetary policy to avoid a repeat of the 1970s-era severe inflation.
What Happened: CNBC reported on Dec. 11, 2023, that Milken, the founder of the Milken Institute, expects the central bank to tackle inflation before moving towards rate cuts. He shared his views during his guest appearance on CNBC’s “Last Call,” held at the Hope Global Forum in Atlanta.
According to Milken, the Federal Reserve’s hasty policy decisions in the 70s resulted in significant inflation and overnight rates skyrocketing to 21%.
“History, as you know, repeats in different ways,” Milken said.
Investors await Fed Chair Jerome Powell’s announcement on the Federal Reserve’s most recent monetary policy decision, expected on Wednesday afternoon. Insights into the timeline for rate cuts are particularly anticipated.
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Why It Matters: The Federal Reserve’s final policy meeting for 2023 was anticipated to maintain the current interest rates. Market participants were hopeful for signs that rate hikes were over, and that rate cuts would commence in the first half of 2024. Any deviation from this expectation could result in sharp market reactions.
The same report also highlighted that economic analysts projected the Federal Reserve to uphold policy settings at this week’s meeting, coupled with a more dovish tone in the statement. This would align with expectations of the Fed’s first-rate cut by May at the latest.
Milken dubbed the “king of junk bonds” in the 1980s, was a pioneer in leveraged buyouts. He pleaded guilty to securities fraud and tax violations in 1990, receiving a pardon from President Donald Trump in 2020.
Despite his past legal troubles, Milken has actively sought to improve his public image through philanthropic endeavors. Milken has poured hundreds of millions of dollars into medical research, social research, and the arts.
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