Cathy Wood, founder of Ark Invest, has forecast a major shift in Federal Reserve policy over the next three months at the earliest.
In a tweet on Twitter, Wood said: “I wouldn’t be surprised if I see a major shift in monetary policy in the next three to six months.”
She added, “It appears that the Federal Reserve’s response to the supply shocks related to the Corona pandemic over the past 15 months is the same way Paul Volcker, the former Federal Reserve Chairman, responded to inflation that has been brewing and accumulating for 15 years, and I think that is wrong.”
Kathy Wood compares Jerome Powell, the Federal Reserve chairman, to Volcker, who headed the bank during the reigns of Jimmy Carter and Ronald Reagan, whose policies in the 1980s helped curb inflation, but interest rates at 20% also led to the collapse of the economy.
She explained that the bank relies in its monetary policy decisions on lagging indicators, namely employment and core inflation, stressing that some key indicators indicate that inflation may have already reached its peak.
Wood noted that gold, a traditional way to hedge once morest inflation, has reached its highest levels in more than two years, and that other commodities including wood, copper, iron and oil have all retreated from their high levels.
And she continued: The main inflation indicators such as gold and copper indicate the risk of deflation, even the price of oil fell by more than 35% from its high levels, erasing most of the gains this year.
