Fed Rate Hikes Are ‘Emptying the Ocean of the Water,’ Barry Sternlicht Says

As the Federal Reserve is expected to hike interest rates again next week in its attempt to curb high inflation, billionaire real estate investor Barry Sternlicht says the U.S. central bank has missed the mark.

The sad part about what the Fed is doing is they are really emptying the ocean of the water, [hurting] the healthy blue whales and all the others, Starwood Capital’s chairman and CEO said Tuesday at a capital markets conference hosted by New York University’s Schack Institute of Real Estate. Everything is in trouble. I’m 62. This is the first time I can tell you with 100% conviction they are wrong.

Higher rates this year have stalled homebuying as well as lending and other market activities.

During the pandemic, there was all this money, $6 trillion here and $12 trillion in the world, printed and handed to consumers, Sternlicht said. That led consumers with “too much money” to spend and shop “chasing too few goods” because of the supply chain bottlenecks, he said, adding that drove the inflation. Fast forward, retailers and other companies that had been busy ordering goods and stocking shelves because of the “pandemic surge” are now met with the reverse situation of consumers having spent their money and a glut of inventory that retailers are discounting during the holiday shopping season.