Why The Fed Chair’s Rate Cut Draws a Warning From Peter Schiff

Key Insights

• Peter Schiff says the Fed Chair’s rate cut makes no sense because inflation is still rising.
• Schiff believes the Fed is now supporting markets instead of fighting high prices.
• Lower rates and more Treasury buying may push money into faster-moving assets.

The Fed Chair has cut interest rates in the last month of 2025, even though inflation is still rising. This surprised many people, including Peter Schiff, who has been one of the more ardent crypto critics.

He says the move does not match normal economic logic. This piece helps understand what the Fed Chair did, why Schiff is unhappy, and how this debate affects markets.

Why Peter Schiff Says the Rate Cut Makes No Sense

The Federal Reserve controls interest rates in the United States. When prices rise too fast, the Fed usually raises rates to slow inflation.

But this time, the Fed Chair cut rates while inflation is still going up. Or it’s at least skewed to the upside.

Peter Schiff says this move is wrong. He believes cutting rates removes pressure on prices, which makes inflation worse.

He also says it hurts families because the cost of food, rent, and daily needs stays high. Schiff calls this an affordability crisis.

He says people earn the same money but pay more for the same things. A rate cut at this time, he says, makes the problem harder to fix.

It is worth mentioning that the rising inflation theory isn’t only Schiff’s. Even the current Fed Chair believes that the inflation concerns are rising.

Why Peter Schiff Thinks the Fed Chair Has a Different Goal Now?

The Fed also started buying US Treasuries only days after ending “QT,” which means reducing its balance sheet. Buying Treasuries adds more money into the system. More money often makes borrowing easier.

When borrowing is easier, markets become calm even if inflation stays high. Schiff believes this shows the Fed is now focused on keeping markets stable, not on fighting inflation.

He says the Fed wants to avoid market stress, even if that means higher prices for families. This is why Schiff thinks the Fed may be losing control of the inflation fight.

He calls this a shift back into support mode, where the Fed tries to protect markets first and the economy second.

When interest rates fall while prices rise, people do not want to hold cash. Cash loses value faster because inflation eats into buying power.

Schiff says this is when traders look for faster-moving assets. However, he still remains critical of Bitcoin.

These include stocks, crypto, commodities, and other assets that move more quickly than cash.

He says the Fed is pushing “cheap credit” into the system at the wrong time. Cheap credit makes it easy for traders to borrow money and take risks.

This can cause sharp moves in markets even if the economy is not strong. According to Schiff, people may chase assets not because inflation is solved.

But they may do so because the Fed’s policy leaves them with no other choice.

Is This a Short-Term Boost or a Long-Term Problem?

This debate has two sides. Some traders think cuts are good because they lift markets right now.

They care more about the next few weeks than the next few years. Schiff disagrees.

He says this short-term boost may create a bigger problem later. If prices keep rising while the Fed cuts more, inflation can become harder to control.

If inflation gets too high, the Fed may need to raise rates again very fast. That could hurt markets even more. This is why Peter Schiff says something “feels off.”

He believes the Fed chair is choosing a path that looks calm today but could cause more trouble tomorrow.

The debate will continue as new inflation numbers arrive. But for now, the main question remains simple:

Why is the Fed cutting rates when prices are still rising?

Schiff thinks the answer is clear: The Fed wants to support markets, even if the economy is not ready for it.

However, despite the cut, the Fed chair has maintained a hawkish tone across the FOMC. That makes new rate cuts less likely in early 2026.