Ken Griffin says US recession is inevitable, but backs Fed hikes

Billionaire hedge fund CEO Ken Griffin believes a recession is inevitable and the Federal Reserve has not been aggressive enough in raising interest rates to bring down record inflation levels.

“We need to continue on the path we’ve taken to make sure we meet our inflation expectations,” Griffin said at a CNBC-hosted conference in New York on Wednesday.

The CEO of Citadel, the hedge fund that manages some $50 billion in assets, believes the United States will fall into recession next year.

“Everyone likes to forecast recessions, and there will be one,” Griffin said. “It’s just a matter of when, and frankly, how much.”

Griffin added: “Is it possible that at the end of 23 we have a hard landing? Absolutely.”

The United States has had two consecutive quarters of negative GDP growth, which technically meets the definition of a recession.

The economic climate is further dampened by the stubbornly high levels of inflation that have not been seen in the country for four decades.

The Fed embarked on a hawkish policy of raising interest rates in hopes of bringing down record levels of inflation.

Earlier this month, the Labor Department released data showing the consumer price index rose 8.3% higher than expected in August, despite falling gasoline prices.

Americans paid more for essentials such as food, health care, housing and appliances.

The Fed responded by raising the benchmark interest rate by 0.75 percentage points, which moved the target range between 3% and 3.25%.

Griffin said Americans shouldn’t assume sky-high levels of inflation will become the norm.

“Once you expect it widely enough, it becomes reality, becomes the table stakes in salary negotiations, for example,” Griffin said.

“It is therefore important that we do not allow inflation expectations to become unanchored.”

Griffin’s encouragement for higher interest rate hikes contrasts with comments from Chicago Federal Reserve Chairman Charles Evans.

Evans told CNBC’s “Squawk Box Europe” on Tuesday that he worries policymakers are raising rates too quickly.

“I’m a little nervous about this,” Evans said. “There are shifts in monetary policy and we have acted quickly. You don’t leave much time to watch each monthly release.

New York Post

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