The Fed won't get inflation back down to its 2% target without sparking an economic depression, according to Interactive Brokers chairman Thomas Peterffy.
The US central bank has been trying to rein in inflation this year, but prices are still going up. Peterffy said it is unlikely that the Fed will reach their goal anytime soon.
It would have to be a very serious depression for the Fed to do that. He warned in an interview that they wouldn't do that.
The economy would have contracted too much for the Fed to avoid a severe downturn if it was able to lower inflation to its long run target. By the time the Fed catches up with inflation, it is unlikely that central bankers will shrink the economy to the necessary levels.
There are inflationary pressures in the economy. Western sanctions on Russian oil have led to Russia cutting its natural gas supplies and causing energy prices to go up.
Peterffy said that the lack of skilled workers in the labor market was one of the reasons for the July job report. According to the Bureau of Labor Statistics, there were more job openings than vacancies.
It's not going to be over soon. "Our rates will have to rise a bit longer and stay up there," Peterffy said.
He predicted the market would bottom when the S&P 500 reached the 3100-3100 range. From Thursday's open at 3950, that would be a 12%-16% drag.
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