- Peter Schiff

Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, has expressed tron ​​concerns about the Federal Reserve’s latest economic strategy. In a post on X, Schiff warned that the Fed’s policies are causing long-term damage, especially when it comes to inflation.

According to Schiff, inflation is expected to rise next year. He noted that any future interest rate cuts by the Fed would likely be aimed at averting a financial crisis, boosting asset markets, or providing relief to struggling banks and labor markets, rather than curbing inflation.

Fed officials were doing damage control today after Powell’s comments on Wednesday. Inflation is likely to rise next year. So if the Fed cuts rates, it will only be to avert a financial crisis, support asset markets, bail out banks, or “stimulate” a weak labor market. - Peter Schiff (@PeterSchiff) examines...

The Federal Reserve on Wednesday cut its key interest rate by a quarter percentage point, its third rate cut this year. However, the move was coupled with a notable shift in the central bank’s outlook for 2025. The Fed now expects to slow the pace of rate cuts next year, largely due to persistent inflation.

US Federal Reserve changes economic forecast for 2025

The US central bank's interest rate forecast rose to 3.9%, up from 3.4% in September. Additionally, inflation expectations were revised up from 2.1% to 2.5%, pointing to a tougher battle in the years ahead.

Federal Reserve Chairman Jerome Powell defended the decision during a news conference, noting that the slower pace of interest rate cuts reflected higher-than-expected inflation this year and the expectation that inflationary pressure would continue through 2025.

Despite the rate cut, Powell's comments pointed to a future path of slow and cautious cuts to address inflation concerns.

Schiff, who appeared on Fox Business after the Fed’s announcement, criticized Powell’s speech, particularly his portrayal of the Fed’s hawkish stance on inflation. Schiff said Powell’s actions were not in line with his words, suggesting that the Fed’s earlier rate cuts were premature. He stressed that interest rates have never reached restrictive levels, and that cutting them now would be a mistake.

Schiff also expressed skepticism about Powell’s claim that inflation could return to the Fed’s 2% target within two years. He believes inflation will remain elevated, dismissing Powell’s forecast as overly optimistic. “Inflation will not be close to 2% in two years. It will be higher than it is now,” Schiff noted.

Schiff warned that the United States may be heading toward a scenario that could complicate economic conditions for the incoming Trump administration. As the administration prepares to take office in January, Schiff predicted that Trump could inherit a fragile economic environment characterized by a stagnant economy and rising financial risks.

Schiff’s concerns also extend to broader financial issues. A recent article on SchiffGold, which the economist reposted on X, highlighted the US government’s bloated defi.

According to the latest figures from the Treasury Department, the US government spent $668 billion in November, adding to October’s $584 billion. This brings the total defi in the first two months of fiscal year 2025 to a staggering $624 billion, the highest total ever recorded for that period.

With government revenues at just $628 billion, the U.S. is on track to hit a record defi by the end of the fiscal year, potentially surpassing $3.5 trillion. Schiff warns that this unintended spending is draining the real economy, and such fiscal policies could lead to economic instability in the long run.

Schiff's Criticism of Trump's Policy Proposals

Schiff also criticized President Trump’s approach to international energy markets, particularly his proposal that the European Union increase its purchases of American oil and gas. The economist believes that this would lead to a decrease in domestic supply and higher energy prices for Americans.

#Trump wants the EU to buy more American oil and gas. If they do, the extra demand will reduce domestic supply, leading to higher energy prices for Americans. Also, if dollars are used to buy oil and gas instead of our debt, the result will be higher bond yields and mortgage rates. - Peter Schiff (@PeterSchiff) examines...

He also stressed that if dollars were used to purchase U.S. energy exports rather than finance debt, the result would be higher bond yields and mortgage rates, exacerbating households' economic challenges.

Yesterday, Schiff criticized Trump's "cost-cutting" policies, saying that the US president is campaigning to reduce the debt, but he is forcing House Republicans to "vote to suspend the debt ceiling for the next two years." He believes this will leave the US Congress "incurring an unlimited amount of debt."