Chamath Palihapitiya: Fed May Delay Rate Cuts Due to Politics, Not Economics
As the Federal Reserve prepares for its upcoming June policy meeting, billionaire investor Chamath Palihapitiya is questioning whether economic logic alone is guiding the central bank’s decisions.
Speaking on the All-In Podcast, Palihapitiya suggested that politics—not economic fundamentals—may be the primary reason the Fed is holding off on interest rate cuts.
He outlined a scenario in which the Fed cuts rates by a full percentage point. Such a move, he argued, would unlock approximately $300 billion in savings on government interest payments, while simultaneously stimulating lending and economic activity through lower borrowing costs.
When paired with an estimated $300 billion in tariff revenue under a potential second Trump administration, Palihapitiya sees a total fiscal impact of $600 billion. “If you make that cheaper, people borrow more money. That fuels more growth, and that will end up in GDP,” he explained.
Despite the clear economic benefits, he questioned why the Fed hasn’t acted. His answer: political optics. With elections approaching, Palihapitiya believes the Fed is cautious about rate changes that could be perceived as favoring a particular political outcome.
He added that if inflation trends closer to the Fed’s 2% target, the central bank will face mounting pressure to defend high rates. Once cuts begin, he predicts a surge in investor confidence and capital inflows to U.S. markets.
In Palihapitiya’s view, delaying cuts may cost the U.S. valuable economic momentum—especially when the data already justifies action.
Kosta Gushterov
Reporter at Coindoo
Kosta joined the team in 2021 and quickly established himself with his thirst for knowledge, incredible dedication, and analytical thinking. He not only covers a wide range of current topics, but also writes excellent reviews, PR articles, and educational materials. His articles are also quoted by other news agencies.
