Citadel CEO Ken Griffin predicts that the Federal Reserve will implement its first rate cut either in September or December, expressing concern about inflation in the services sector.
“If they [the Fed] haven’t cut in September, they are likely to cut in December. There’s still a question of will inflation actually decelerate enough by then.”
Ken Griffin, founder and chief executive of Citadel
According to Citadel founder and chief executive Ken Griffin, the Federal Reserve is expected to reduce interest rates in either September or December. This decision comes as the central bank faces difficulties in addressing the persistent U.S. services inflation and bringing it back to its 2% target.
According to Griffin, there are several factors that are impacting the economy, such as wage growth, core inflation, and de-globalization. These factors are challenging the long-standing deflationary trend that has benefited the pricing of goods for many years.
During a recent interview with CNBC, Griffin expressed his support for Chair Jerome Powell and other policymakers’ decision to keep policy rates unchanged in a range of 5.25-5.5% for the foreseeable future.
“It is important to gradually reduce inflation,” he stated, acknowledging uncertainty regarding the persistence of services inflation. However, he expressed satisfaction with the dissipation of goods inflation.”
Check out: Citadel’s Ken Griffin urges caution from the Fed in implementing rate cuts to prevent potential disaster
Regarding the potential impact of rate uncertainty and AI tailwinds on the current stock market SPX, Griffin mentioned that we will have to wait and see, as that’s the most we can do in the late-cycle.
“AI has really transformed the mindset of corporate America — it’s trying to jump-start productivity and corporate America is rising to that moment,” he added.
Nevertheless, the billionaire hedge-fund manager expressed skepticism in a March interview about the possibility of significant productivity gains that the markets are anticipating. He also criticized those who promote large language models as a revolutionary development in the near future.
On Monday, Griffin refrained from endorsing any particular candidate in the upcoming presidential election, where Biden and Trump, both current and former presidents, are vying for the White House.
However, Griffin mentioned that the positive aspect on the Trump side is that the individuals being considered for his cabinet are highly qualified and reputable. so I am more confident in the belief that Trump will struggle to attract qualified individuals.
The U.S. stock market saw gains on Monday, as the S&P 500 rose by 1% and the Nasdaq Composite advanced by 1.2%. The Dow Jones Industrial Average also ended the day higher, with a 0.5% increase, according to FactSet data.
