Oaktree Capital Co-founder: Don't think the Federal Reserve needs to cut interest rates sharply, question the logic of AI debt financing

Howard Marks, co-founder of Oaktree Capital Management, warned that the Federal Reserve's "intervention" in the cost of capital would push people into riskier investments at a time when the return environment was moderating. He said he did not see the need for interest rates to fall significantly below their current levels. "I think the Fed should be passive most of the time and only bail out when the economy is seriously overheating, heading for hyperinflation, or seriously depressed and unable to create jobs," Mr. Marks said. "I don't think that's the case at the moment." Earlier this week, Mr. Marks wrote in a blog post that he was "terrified" of the impact of artificial intelligence on jobs and questioned the practice of hyperscale companies issuing large amounts of debt at very low yields to finance AI deployments while demand for AI remains uncertain.