Billionaire investor Ken Griffin has warned that a recession will hit the US, saying the Federal Reserve must do more to curb inflation, days after the central bank cut its benchmark interest rate by 0.75 percentage points for the third time in a row. has increased.
“Everyone likes to predict recessions and there will be one,” he said at the CNBC Delivering Alpha conference in New York on Wednesday. “It’s just a matter of when, and frankly, how difficult.” A recession could happen as early as next year, he added.
Hedge fund founder Citadel and market maker Citadel Securities said raising interest rates was an “inconvenient tool” for cooling the economy, but acknowledged the Fed is limited in what it can do to curb inflation.
Griffin joins a growing chorus of voices predicting pain for the US economy, including Fed Chairman Jay Powell who said last week there was no “painless way” to bring inflation under control.
Despite the bleak outlook, Griffin said the Fed should stick to its campaign to tighten monetary policy. “We need to continue down that path to make sure we re-anchor inflation expectations,” he said, so people don’t start to see 5 or 6 percent inflation as the norm.
Earlier in the day, Stanley Druckenmiller, a veteran of the hedge fund industry, took an even bleaker stance. “We’re in deep trouble,” he said, adding that he would be “baffled” if the US doesn’t fall into recession next year.
Griffin made a distinction between the US and Europe, which he said could already be in recession due to high gas prices.
He said former President Donald Trump had tried to distract the continent from its reliance on Russian oil.
“Europe was willing to trust Russia as its fundamental energy supplier,” Griffin said. “In fact, when it came to Nord Stream, the whole point President Trump had about ‘no to Nord Stream’ was trying to reduce Europe’s dependence on the Russians for energy. Guess what? [He] was right.”
Griffin’s hedge fund was among the best-performing in the industry this year, with the multi-strategy Wellington fund’s flagship fund so far growing more than 28 percent in 2022, according to a source familiar with the firm.