Josh Brown says the Fed has 'zero credibility' after big miss on 2022 rate hike forecasts

Published Tue, Oct 11 20221:35 PM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Ritholtz Wealth Management CEO Josh Brown said Tuesday that investors should put little weight on the Federal Reserve's predictions about rate hikes after the central bank's missteps over the past year. "This is a body of people who one year ago today were telling us, based on their forecasts, that there would be no rate hikes in 2022. None," Brown said on " Halftime Report ." "We have just had the fastest, most severe rate hiking cycle that most people in the market have ever seen." "They have no idea, and they have zero credibility. The only thing worse than the Fed's forecast is no forecast, which is why cling to these things, but in reality they don't know what they're going to do," he added. The Federal Reserve has implemented three consecutive rate hikes of 75 basis points, or three-quarters of one percent. The central bank is widely expected to do another hike of that size at its November meeting. At its last meeting, the Fed's dot plot showed its benchmark interest rate rising above 4.5% next yea r compared to a range of 3% to 3.25% currently. The rapid rate hikes come as inflation has stayed stubbornly high throughout 2022 and Fed officials have abandoned their previous position that the price increases would prove "transitory." Brown compared the central bank to a basketball team that has lost control of the ball but doesn't yet realize they need to play defense. "It's almost like a contest: How quickly can we cause a financial crisis so that we have the excuse to stop ratcheting up the hawkishness and the expectations of more rate hikes," he said. Brown did say that the Fed's rate hikes appear to be working to control inflation, describing the housing market as "frozen solid" and pointing to credit card data as proof that spending was starting to slow in other areas. However, he said that the labor market will be last to show impact of rate hikes because companies are reluctant to make layoffs after having difficulty hiring over the prior year and a half.