DAVOS (Realist English). The US Federal Reserve system should start acting much more aggressively to cope with raging inflation, said Bill Ackman, an American financier, founder of the Pershing Square Capital Management hedge fund.
“There is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction,” Ackman said in a slew of tweets Tuesday.
The Pershing Square hedge fund manager attributed 2022′s market correction to investors’ lack of confidence that the central bank could squash a 40-year high in inflation. He said the market turmoil will only end if the Fed “puts a line in the sand” on soaring prices.
The raging inflation will only dissipate if the Federal Reserve acts more aggressively or the market sell-off turns into a full-on collapse. “If the Fed doesn’t do its job, the market will do the Fed’s job, and that is what is happening now.” says Bill Ackman, founder of the Pershing Square Capital Management hedge fund.
In early May, the financial regulator raised the interest rate by half a percent. But Ackman believes at this point investors will cheer the Fed raising rates more rapidly because inflation is spiraling out of control.:
“Markets will soar once investors can be confident that the days of runaway inflation are over. Let’s hope the Fed gets it right,” Ackman said.
The hedge fund manager said the Fed should demonstrate its seriousness by immediately raising rates to neutral and committing to continue to hike borrowing costs until “the inflation genie is back in the bottle.”
By the end of February, annual inflation in the United States reached 7.9%. This is the maximum value since January 1982, that is, more than 40 years. Inflation in the country is growing largely due to the rise in the price of gasoline, food and housing.