Ken Griffin, the founder and CEO of Citadel, shared his perspective on the Federal Reserve’s approach to tackling persistent inflation, suggesting a cautious stance on interest rate cuts.
“If I’m them, I don’t want to cut too quickly,” Griffin expressed during the International Futures Industry conference in Boca Raton, Florida on Tuesday.
“The worst thing they could end up doing is cutting, pausing, and then changing direction back towards higher rates quickly. That would, in my opinion, be the most devastating course of action that they could pursue.”
“So I think they are going to be a bit slower than what people were expecting two months ago in cutting rates. I think we are seeing that play out,” he added.
Griffin’s remarks coincided with the release of data indicating a further increase in inflation during February, surpassing expectations with the consumer price index climbing on an annualized basis.
This upward trend in price pressures suggests that the Fed may maintain its current stance, possibly waiting until summer before considering interest rate reductions.
The billionaire investor highlighted significant inflationary factors contributing to elevated prices. “We still have an enormous amount of government spending. That’s pro-inflationary. And we are also going to a period in the history of deglobalization.
So we’ve got two big, big tailwinds that continue to support the inflation narrative,” Griffin explained.
Although the inflation rate has decreased from its mid-2022 peak, it remains above the Fed’s 2% target. Fed officials have signaled potential rate cuts this year but have emphasized caution in prematurely easing the fight against high prices.
The Fed’s upcoming two-day policy meeting looms in a week.
Citadel’s flagship multistrategy Wellington fund achieved a 15.3% gain last year.
