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Barrons senior writer Al Root discusses how Elon Musk has revitalized the space industry and weighs in on his Mars ambitions on Barrons Roundtable.

Tesla CEO Elon Musk warned on Tuesday that the economy is in for a challenging year ahead and said the Federal Reserve will be too slow to lower interest rates as economic conditions worsen.

Musk was interviewed by CNBC's David Faber following Tesla’s annual meeting and asked Musk about how the Fed’s policy will make it a tough year for Tesla. Musk responded that it will be a tough year "for everyone, not just Tesla" and attributed it to the Fed’s recent rate hikes to tamp down stubbornly high inflation.

"You can think of raising the Fed rate as somewhat of a brake pedal on the economy, frankly. It makes a lot of things more expensive – certainly things that are bought with credit," Musk said. "But then it has downstream effects even on things that aren’t bought with credit."

ELON MUSK TELLS TESLA EXECUTIVES HE MUST PERSONALLY APPROVE ALL HIRING IN NEW MEMO: REPORT

Billionaire Elon Musk, the CEO of Tesla, Twitter, and SpaceX, warned that the Federal Reserve will be too slow to lower interest rates, just as it was slow to raise rates as inflation spiked. ((AP Photo/Susan Walsh, File) / AP Newsroom)

Musk explained that "if the car payments or your home mortgage payment is absorbing more of your monthly budget, then you have less money to buy other things. So actually, it affects everything, even those that aren’t bought on a line of credit."

"My concern with the way the Federal Reserve is making decisions is they’re just operating with too much latency," Musk continued. "Basically, the data is somewhat stale. The Federal Reserve was slow to raise interest rates, and now I think they’re going be slow to lower them."

INVESTORS ARE THE MOST PESSIMISTIC THIS YEAR AMID CREDIT CRUNCH, RECESSION FEARS

Musk said that economic conditions will be challenging “for everyone, not just Tesla” this year. ((Photo by Smith Collection/Gado/Getty Images) / Getty Images)

Earlier this month, the Fed raised interest rates for the 10th consecutive time and the benchmark federal funds rate is now at the highest levels in 16 years. 

But the central bank signaled that may pause further rate hikes and future monetary policy moves will hinge on "incoming information."

INFLATION JUMPED 0.4% IN APRIL AS PRICES REMAIN STUBBORNLY HIGH

Federal Reserve Chairman Jerome Powell has signaled the Fed may pause interest rate hikes as early as the Fed’s next meeting depending on economic data. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)

The Fed’s post-meeting statement noted, "In determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

The statement omitted a phrase that had been included in the prior statement announcing a rate hike, in which the central bank indicated that "some additional policy firming may be appropriate" to bring inflation to the 2% target. Ticker Security Last Change Change % TSLA TESLA INC. 166.52 +0.17 +0.10%

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Federal Reserve Chairman Jerome Powell said in a post-meeting press conference that, "A decision on a pause was not made today," but emphasized that, "We’re no longer saying that we ‘anticipate,’" and reiterated that the Fed’s future policy decisions will "be driven by incoming data, meeting to meeting."

FOX Business’ Megan Henney contributed to this report.

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Collapsed crypto firm Ziglu faces $2.7M deficit amid special administration

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Collapsed crypto firm Ziglu faces .7M deficit amid special administration

Collapsed crypto firm Ziglu faces .7M deficit amid special administration

Thousands of savers face potential losses after a $2.7 million shortfall was discovered at Ziglu, a British crypto fintech that entered special administration.

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Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget

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Heidi Alexander says 'fairness' will be government's 'guiding principle' when it comes to taxes at next budget

Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.

Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.

Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.

Politics Hub: Catch up on the latest

Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.

Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.

“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”

Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.

“When it comes to taxation, fairness is going to be our guiding principle.”

Read more:
Reeves won’t rule out tax rises

What is a wealth tax and how would it work?

👉Listen to Politics at Sam and Anne’s on your podcast app👈      

Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”

He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.

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Chris Philp also criticsed the government’s migration deal with France

Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.

Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.

Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.

With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.

The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.

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Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget

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Heidi Alexander says 'fairness' will be government's 'guiding principle' when it comes to taxes at next budget

Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.

Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.

Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.

Politics Hub: Catch up on the latest

Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.

Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.

“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”

Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.

“When it comes to taxation, fairness is going to be our guiding principle.”

Read more:
Reeves won’t rule out tax rises

What is a wealth tax and how would it work?

👉Listen to Politics at Sam and Anne’s on your podcast app👈      

Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”

He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.

Please use Chrome browser for a more accessible video player

Chris Philp also criticsed the government’s migration deal with France

Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.

Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.

Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.

With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.

The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.

Continue Reading

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