The Fed is going to cause 'unbelievable calamities' if it keeps hiking, according to Barry Sternlicht

The Federal Reserve's assertive complaint hike way – an effort to calm the highest ostentation successful decades – is acceptable to origin harm to the planetary system if the cardinal slope keeps going, according to billionaire Barry Sternlicht.

"They are going to origin unbelievable calamities if they support up their action, and not conscionable here, each implicit the globe," said the president and CEO of Starwood Capital Group connected CNBC's "Squawk Box" Tuesday. Instead, the Fed should determination slower and look much intimately astatine economical data, helium said.

The Federal Reserve has truthful acold this twelvemonth delivered 3 0.75 percent constituent involvement complaint hikes to quell precocious inflation. In addition, astatine its latest gathering it signaled that astatine slightest 1 much 0.75 percent constituent complaint hike is successful the cards this year.

He noted that the Fed's actions, which person boosted the U.S. dollar, are already scrambling planetary currency markets. Many currencies including the yen, euro and lb person mislaid worth against the dollar. These changes tin enactment a wrench successful planetary trade.

He besides sees the Fed arsenic misunderstanding the origin of precocious inflation, which is from monolithic fiscal stimulus packages that went retired arsenic economies were reopening from coronavirus pandemic lockdowns.

"Now that we're gathering momentum and radical are getting employed and wages are rising, they privation to stomp connected the full happening and extremity the party," helium said.

But, excessively overmuch enactment astir apt isn't indispensable – portion U.S. consumers are inactive spending, it's inevitable that they volition dilatory purchases arsenic stimulus wealth runs out. Data is already showing this successful immoderate areas – car purchases person slipped, arsenic person lodging sales, arsenic rates increase. In addition, the $36 trillion rout successful the banal marketplace this twelvemonth has besides slowed purchasing power.

If the Fed continues to tighten, businesses volition enactment disconnected hiring and concern decisions, superior spending volition dilatory and tech stocks – which person already been deed by higher involvement rates – volition proceed to struggle, helium said.

"The Fed has to halt and conscionable look astatine the data," helium said, adding that the cardinal slope needs to absorption connected the existent economy. "The equity marketplace and the enslaved marketplace determination overnight connected the Fed but the existent system takes time."

He said if the warfare successful Ukraine resolves much rapidly than expected that volition beryllium a affirmative for the planetary system arsenic volition China's eventual reopening.

Correction: An earlier header misstated Barry Sternlicht's quote. He said the Federal Reserve volition origin "unbelievable calamities if they support up their action."