Now It's the Citadel CEO Who's Against Premature Rate Cuts
Economists seem to think rate cuts will likely come in June.
First it was JPMorgan Chase CEO Jamie Dimon who said he didn’t want to see the Federal Reserve cut interest rates prematurely, preferring it wait until at least June to begin.
Now it’s Citadel founder Ken Griffin who is voicing similar sentiments.
“Pausing and then changing direction back toward higher rates quickly, that would, in my opinion, be the most devastating course of action to pursue,” Griffin said yesterday at the Futures Industry Association conference, in remarks reported by Bloomberg.
And like Dimon, Griffin is concerned that inflationary forces could rear up again if the Fed were to lower rates too quickly. “We still have an enormous amount of government spending,” he said, according to CNBC. “ That’s pro inflationary. And we are also going to a period in history of deglobalization. So we’ve got two big, big tailwinds that continue to support the inflation narrative.”
And almost as though it were timed to coincide with Griffin’s speech yesterday the February Consumer Price Index came in at a higher-than-expected 3.2% year over year.
What the Fed may do is anyone’s guess. Last week Chair Jerome Powell told the House of Representatives as part of the Fed’s semi-annual address to Congress that ”our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” When he addressed the Senate the next day, he appeared to be a bit more bullish on the timeline. “We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.”
Meanwhile, the majority of economists polled by Reuters believe that the Fed will begin rate reductions in June. Perhaps more dismaying to the business community, respondents also said it was more likely that if Fed policymakers change their rate projections at the March 19-20 meeting they would signal fewer cuts this year, not more.