Peter Schiff: The Fed Has Lost Inflation Fight — ‘Markets Just Haven’t Figured That out Yet’

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Economist Peter Schiff has warned that the Federal Reserve has lost and inflation is about to get worse. “The markets just haven’t figured that out yet,” he cautioned, emphasizing that “We continue to get a lot of weak economic data.”

‘The Fed Has Lost’

Economist and gold bug Peter Schiff issued more warnings about the U.S. economy in a podcast Sunday. Commenting on the Nasdaq, the S&P 500, and the Dow Jones rallying in June even though the Federal Reserve has not started cutting interest rates and has indicated that it is going to hike some more, he opined:

I think it’s because the markets don’t really believe the Fed. They know the Fed is likely near the end or done hiking, and so that is the relief rally.

Emphasizing that these are all bear market rallies, Schiff warned that “The markets are missing a key point — inflation is going to get worse.” The gold bug stressed:

The Fed hasn’t won. The Fed has lost. The markets just haven’t figured that out yet.

Schiff further noted: “We’ve had a little bit of good news. The employment numbers continue to surprise on the upside. But again, I think this is all very superficial. We continue to get a lot of weak economic data.”

Meanwhile, inflation remains stubbornly high, with the core PCE Price Index rising 4.6% year-on-year, Schiff pointed out, adding that it is significantly above the Fed’s target of 2%.

Referencing Federal Reserve Chairman Jerome Powell’s statement indicating that he does not expect inflation to reach the Fed’s target of 2% until 2025, Schiff opined:

That’s another two more years. And of course, he’s still wrong. We’re still not going to get down to 2% … A lot can happen in the next two years, including a big recession, which means lots of money printing, which means inflation could take off.

“If you’ve got to look forward two years in order to forecast 2% inflation, you have no confidence whatsoever in the accuracy of that forecast. So, in other words, Powell has no idea when, if ever, inflation is going to get down to 2%. That is a big admission,” Schiff said.

This was not the first time Schiff has criticized the Fed chairman. Last month, he called Powell a coward who is not doing his job. “What he overlooks are the far more relevant common factors of artificially low interest rates, quantitative easing, and government deficit spending,” the gold bug said at the time. He also accused the Federal Reserve of destroying the U.S. banking system, emphasizing that “it’s insolvent.” Schiff has consistently raised concerns about the looming U.S. dollar crisis and the escalating national debt that appears to be spiraling out of control.

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