Peter Schiff Believes Even A 25 Bps Rate Hike Won’t Be Enough To Curb Inflation

Federal Reserve Governor Michael Barr said if inflation does not moderate sufficiently, policymakers could act decisively to raise rates.

• Schiff said even a 25-basis-point hike would be too small to meaningfully curb inflation
• Jim Cramer expressed doubts over a rate cut, pointing to Warsh’s stance on inflation, the ongoing U.S.-Iran conflict and the increase in oil prices.
• The probability of a 25-basis-point rate hike in September climbed to 66.4% from 39.6% last week, according to the CME FedWatch tool.

U.S. 10-year Treasury yields climbed to their highest levels in more than a year on Tuesday as rising oil prices and expectations of a rate hike by the Federal Reserve renewed concerns about inflation, but economist Peter Schiff believes the bond-market selloff could ultimately make a rate hike less likely.

At the time of writing, the benchmark 10-year Treasury yield traded at around 4.76%, after having hit its highest level since January 2025.

Schiff Says 25 Bps Hike Won’t Be Enough To Curb Inflation

Schiff argued that the higher the 10-year yield climbs in anticipation of rate increases, the less likely the Fed becomes to actually raise rates. He added that even a 25-basis-point hike would be too small to meaningfully curb inflation.

“Even if it does hike 25 basis points, it'll be too little to reduce inflation. Plus, higher rates increase future budget deficits, raising both bond yields and inflation,” Schiff said in a post on X.

The market is increasing its bets on a rate hike in September after Chair Kevin Warsh said last week that recent inflation data had not convinced him underlying price pressures were moving sustainably toward the Fed’s 2% target.

The probability of a 25-basis-point rate hike in September climbed to 66.4% from 39.6% last week, according to the CME FedWatch tool.

Cramer Sees ‘Unholy Developments’

Meanwhile, Jim Cramer pointed to Warsh’s tougher stance on inflation, the ongoing U.S.-Iran conflict, and the jump in oil stock prices, calling the combination “unholy developments.”

“I don’t see how rates can go down now that we see Warsh as a serious practitioner, the president unable to stop the war, the allies in the region depending almost entirely on us, and oil stocks headed back up quickly. Unholy developments,” Cramer said in a post on X.

Brent crude futures for November 2026 deliveries climbed around 2.5% to $92.75 per barrel.

Fed’s Barr Says Rate Hike Is Not Off The Table

On Tuesday, Federal Reserve Governor Michael Barr said that while inflation fell sharply from 2022 to 2024, progress stalled in 2025 due to tariffs, the Middle East conflict and the AI boom.

Barr added that if inflation remains stubborn, the policymakers could raise interest rates.

“If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance. However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates,” Barr said in his prepared speech.

Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT) was down 0.26% while the iShares 7-10 Year Treasury Bond ETF (IEF) edged 0.19% lower. Retail sentiment for TLT turned ‘Neutral’ from ‘Bullish’ over the past 24 hours, while sentiment for IEF trended in the ‘Neutral’ territory.

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