Peter Schiff: ‘Janet Yellen can blame her failure to raise rates on Brexit’

The Brexit fallout led to the biggest wipeout of the global stock market of all time. More than $2 trillion was eviscerated everywhere from London to New York, from Beijing to Toronto. This level of panic will likely create some uncertainty in the markets for some time.

Of course, Brexit also means that the Federal Reserve will not raise interest rates in July or possible even September. According to the CME Group FedWatch tool, there is a six percent chance of a rate hike next month and a 22 percent chance of a rate hike in September.

Because of Brexit, one contrarian investor thinks Fed Chair Janet Yellen should send the likes of Nigel Farage and Boris Johnson a gift basket.

Peter Schiff, president and CEO of Euro Pacific Capital, told CNBC after the Brexit vote that the United States central bank can blame the rate hike delay on the British leaving the European Union (EU). He noted that the Fed’s willingness to raise rates was already in doubt, but now it’s been amplified.

“Now, Janet Yellen can blame her failure to raise rates on Brexit,” Schiff told the business news network. “She could even use this as an excuse to cut rates back to zero and launch QE4. As far as Janet Yellen is concerned, the British have given her the gift that keeps on giving.”

Schiff notes that without Brexit, the Fed would have had to concede that U.S. economic weakness would be the reason the central bank has to leave rates close to zero.

“Since the process is bound to be long, messy and fraught with uncertainties this will be a handy excuse that the Fed will be able to rely on for years,” said Schiff. “Given that there is already much concern that the dollar is valued too highly against most currencies, any surge in the dollar that results from Brexit will have to be fought by the Federal Reserve through lower interest rates and quantitative easing.”

The Brexit fallout on Tuesday (at the time of this writing) isn’t too bad. The Dow Jones is up 135 points, the S&P 500 is up 18 points and the Nasdaq  is up 64 points. European and Asian markets are also up.