Elon Musk and Billionaire Investors Bill Ackman Urges US Federal Reserve to Halt Interest Rate Increases

Bill Ackman, an American billionaire investor and founder of Pershing Square Capital, has urged the US Federal Reserve to temporarily halt its policy to stabilize the local banking system and prevent contagion. He took to Twitter to explain why the Fed should abandon its interest rate-increasing strategy, pointing out the recent banking collapses in the US, which affected equity and bondholders. He believes the turbulence remains "unsolved," and increasing interest rates for a ninth consecutive time could cause additional investor losses and a domino effect of crashing banks.

Elon Musk, Tesla's CEO and one of the world's richest people, also urged the central bank to drop interest rates by at least 50 basis points at the FOMC meeting this week. Numerous cryptocurrency proponents and experts believe that such a decision could be highly beneficial for digital assets, including Bitcoin. BitMEX estimated that it could propel a market recovery and boost interest in the cryptocurrency industry as investors will likely seek exposure to riskier assets in search of greater returns.

However, it seems unlikely that the US central bank will pivot this week. Most market participants think it will lift interest rates by 25 basis points, rounding the mark to 5%. Ackman acknowledges the inflation rate in the US as an existing problem that the Fed needs to solve. However, the central bank should focus on other monetary tools, such as an FDIC deposit guarantee until an updated insurance regime is introduced. The billionaire believes that financial stability is the Fed's first responsibility, and raising rates and adding additional pressure on the system during such turbulence is not an environment in which the central bank should be operating.

Ackman cited the example of the recent banking collapses in the US, including Silvergate Capital, Silicon Valley Bank, and Signature Bank, and how other financial institutions have also experienced significant difficulties. The San Francisco-based First Republic Bank saw its shares plummet by over 90% in the past month, and Ackman believes that increasing interest rates could cause additional investor losses and a domino effect of crashing banks.

The current economic environment presents challenges for the Fed, and Ackman's call for the central bank to temporarily abandon its interest rate-increasing strategy reflects the concerns of many investors. The Fed's decision on interest rates this week will be closely watched, and the impact it has on the broader economy and digital assets such as Bitcoin will be of interest to investors across the globe.