Donnamu Unnie: "The Fed's Interest Rate Hike Is a Mistake"

Cathie Wood, CEO of ARK Investment (Photo by Reuters)

[Asia Economy Reporter Yujin Cho] Cathie Wood, CEO of ARK Investment, known as the 'Money Tree Sister' among domestic investors, stated on the 13th (local time) that "deflation is more concerning than inflation for the U.S. economy."

Wood said, "The stabilization of gold prices and the decline in raw materials and freight rates indicate that the supply chain issues, which had driven inflation to its highest level in 40 years, are easing," adding, "At the same time, price pressures will decrease due to the U.S. economic recession."

She also claimed, "The Federal Reserve's (Fed) decision to raise interest rates will prove to be a mistake."

This is interpreted as a reiteration of her previous argument that the Fed's rate hikes will increase deflationary pressures.

Wood believes the U.S. economy has already entered a recession and has criticized the Fed for making policy mistakes as it pursues aggressive tightening by implementing three consecutive giant steps.

On the same day, the U.S. Department of Labor announced that the Consumer Price Index (CPI) for August rose 8.3% compared to the same period last year, exceeding the market expectation of 8.0%.

On a seasonally adjusted basis, the CPI increased by 0.1% month-over-month, contrary to the expected 0.1% decline. In July, the month-over-month increase was flat (0.0%).

With the CPI exceeding expectations and concerns about prolonged high inflation growing, some market participants expect the Fed to raise the benchmark interest rate by 1 percentage point at the Federal Open Market Committee (FOMC) regular meeting scheduled for the 20th-21st of this month.

Meanwhile, the ARK Innovation Fund, managed by ARK Investment and focused on technology stocks, fell more than 5.5% in the afternoon as its holdings, including cryptocurrency company Coinbase and global virtual healthcare company Teladoc Health, plummeted.

The ARK Innovation Fund has plunged 54.4% year-to-date, recording the lowest performance among 597 U.S. mid-cap growth funds tracked by global fund rating agency Morningstar.

This content was produced with the assistance of AI translation services.