The Federal Reserve will have to cause “shock and awe” in the markets with a large increase in interest rates in order to “regain its credibility,” said Bill Ackman.
The billionaire hedge-fund manager said the US Federal Reserve would have to resort to the traditional method of “shock and awe” in the financial markets, making a much larger increase in interest rates in order to tackle inflation.
“Although the prevailing view now is that the Federal Reserve will raise interest rates 3 to 4 times this year to curb inflation, the market expects the increases to be 25 basis points. The elephant in the room to be resolved is however the damage to the Fed’s credibility as the force dealing with inflation even if 3 of 4 [αυξήσεις] will be enough “.
“The Federal Reserve could work to regain its credibility with an initial surprise move of 50 bp to cause shock and awe in the markets, thus demonstrating its determination for inflation. The Fed is losing its battle inflation and is lagging behind, “Ackman said in a Twitter post.
While it has become conventional wisdom that the @federalreserve will raise rates 3 to 4 times this year to mitigate inflation, the market expects 25 bp increments. The unresolved elephant in the room is the loss of the Fed’s perceived credibility as an inflation fighter and
— Bill Ackman (@BillAckman) January 15, 2022
Most analysts expect the US Federal Reserve to begin the cycle of tightening its policy with a 25-point increase in interest rates. on March.
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Source From: Capital
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