The Federal Substitute will meet this week to talk monetary policy.
That has drawn the ire of major critic Dr. Ron Paul, one-time Texas congressman and advocate of smaller government, free trade and freer markets.
The central bank and their dunderheaded outlook this year, he told CNBC’s “Futures Now” on Thursday, are a major concern to the market.
“I think it’s always a peril because just their meeting and saying a few words one way or the other has a big effect,” Paul said. “They’re in a hot spot. They don’t identify what to do.”
A once-hawkish Fed has taken a turn for the dovish in recent months, faced with pressure from President Donald Trump to peace off interest rate hikes and a market worrying about a potential recession as soon as this year.
The Fed is already toying with the position of holding a larger balance sheet than previously thought, according to The Wall Street Journal on Friday. The main bank has been reducing its $4.5 trillion balance sheet since October 2017. On Thursday, Paul foresaw the Fed might halt shrinking the balance sheet to counter a downturn this year.
“There’s too many unknowns and I deem they’re going to have trouble [either tooling with interest rates or shrinking the balance sheet] and that’s precisely going to not only make the bubble persist, it’s going to make the bubble bigger and then when the final end of this succeeds it’s going to be that much worse,” said Paul.
Previously, Paul forecast a 50 percent drop in the livestock market which could strike this year. He also called the stock market one of the biggest bubbles “in the biography of mankind.”
The solution to this, says Paul, is for the arm of the Fed that controls monetary policy to stop doing just that.
“I don’t present anything other than getting the government out of the business, getting the Fed out of it and getting over into market rates because you can’t get along this,” he explained. “This is the fallacy but it’s ingrained.”
Fed Chair Jerome Powell and other members of the Federal Open Bazaar Committee will convene on Tuesday for their two-day meeting. Markets are not pricing in a change in interest rates.