‘Junk Bond’ King Michael Milken Foresees Fed Dodging 1970’s-Style Inflation: ‘History…Repeats In Different Ways’

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Noted investor Michael Milken has predicted that the Federal Reserve will adopt a careful approach to monetary policy to avoid a repeat of the severe inflation experienced in the 1970s. Milken, the founder of the Milken Institute, shared his views during a guest appearance on CNBC’s “Last Call” at the Hope Global Forum in Atlanta.

According to Milken, the Federal Reserve’s hasty policy decisions in the 70s resulted in significant inflation and overnight rates skyrocketing to 21%. He believes that history has a tendency to repeat itself in different ways, and therefore, the central bank should be cautious in its approach to avoid a similar outcome.

Investors are eagerly awaiting Fed Chair Jerome Powell’s announcement on the Federal Reserve’s most recent monetary policy decision, expected on Wednesday afternoon. The timeline for rate cuts is particularly anticipated. The Federal Reserve’s final policy meeting for 2023 was expected to maintain the current interest rates, with market participants hoping for signs that rate hikes were over and rate cuts would begin in the first half of 2024. Any deviation from this expectation could result in sharp market reactions.

Economic analysts projected the Federal Reserve to uphold policy settings at this week’s meeting, coupled with a more dovish tone in the statement. This aligns with expectations of the Fed’s first-rate cut by May at the latest.

Michael Milken, dubbed the “king of junk bonds” in the 1980s, was a pioneer in leveraged buyouts. However, he pleaded guilty to securities fraud and tax violations in 1990 and received a pardon from President Donald Trump in 2020. Despite his past legal troubles, Milken has actively sought to improve his public image through philanthropic endeavors, pouring hundreds of millions of dollars into medical research, social research, and the arts.

In conclusion, Michael Milken predicts that the Federal Reserve will take a cautious approach to monetary policy to avoid a repeat of severe inflation. Investors are eagerly awaiting the central bank’s announcement on rate cuts, and any deviation from expectations could have significant market implications.

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