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Billionaire investor Chamath Palihapitiya believes that the Fed will not cut interest rates in the near future due to rising oil prices and inflation. He argues that the situation in the oil market will prevent the Fed from deviating from its path of raising interest rates to combat inflation.
Palihapitiya points to the fact that the US strategic oil reserve is at an extremely low level, and that the Biden administration has already emptied the reserve in an attempt to lower the US Consumer Price Index. He believes that this makes it unlikely that the US government will be able to increase supply to slow down rising oil prices.
The billionaire investor also notes that the war between Israel and Hamas, as well as OPEC's production cut of 1.5 million barrels, are further contributing to rising oil prices. He believes that these factors make it likely that oil prices will continue to rise, which will in turn put upward pressure on inflation.
Palihapitiya argues that the Fed is already under great pressure not to cause any damage and ideally start a rate-cut cycle soon. However, he believes that the situation in the oil market makes this path much less likely. He concludes by stating that it is "dizzying that so many things are loosely connected to each other and affect everything else."
The Federal Reserve is unlikely to cut interest rates anytime soon, according to billionaire investor Chamath Palihapitiya. He believes that the ongoing war between Israel and Hamas, as well as OPEC's production cut, will continue to drive up oil prices, which will in turn put upward pressure on inflation. This will prevent the Fed from deviating from its path of raising interest rates to combat inflation.
Palihapitiya also pointed to the fact that the US strategic oil reserve is at an extremely low level, making it unlikely that the US government will be able to increase supply to slow down rising oil prices. He called the situation "dizzying," noting how loosely connected things are and how they can affect everything else
