Billionaire investor Ken Griffin has warned there will be a recession in the United States and said the Federal Reserve must do more to reduce inflation, days after the central bank raised its benchmark rate from 0 .75 percentage points for the third consecutive time.
“Everyone likes to predict recessions and there will be one,” he said Wednesday at CNBC’s Delivering Alpha conference in New York. “It’s just a matter of when, and frankly, how much.” A recession could strike as early as next year, he added.
The Citadel hedge fund founder and market maker Citadel Securities said raising interest rates was a “clumsy tool” to cool the economy, but acknowledged the Fed is limited in what it can to curb inflation.
Griffin joins a growing chorus of voices predicting the pain of the US economy, including Fed Chairman Jay Powell, who said last week there was no “painless way” to bring the crisis under control. inflation.
Despite the gloomy outlook, Griffin said the Fed must stick to its campaign to tighten monetary policy. “We need to continue on the path we’ve taken to make sure we re-anchor inflation expectations,” he said, so people don’t start treating 5% or 6% inflation as the norm.
Earlier in the day, hedge fund industry veteran Stanley Druckenmiller took an even darker stance. “We’re in big trouble,” he said, adding he’d be “stunned” if the United States didn’t tip into a recession next year.
Griffin drew a distinction between the United States and Europe, which he said could already be in recession due to high gas prices.
He said former President Donald Trump had tried to wean the continent off its dependence on Russian oil.
“Europe was willing to trust Russia as a fundamental supplier of energy,” Griffin said. “In fact, when it comes 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. And guess what? what? [He] was right.”
Griffin’s hedge fund has been among the best performers in the sector this year, with flagship multi-strategy fund Wellington up more than 28% so far in 2022, according to a source close to the firm.
