Bill Ackman, a billionaire and founder of Pershing Square Capital Management, expects the U.S. Federal Reserve to start lowering interest rates sooner than the market expects.
Mr. Ackman (57) pointed out that interest rate cuts could occur in the first quarter of 2024. Traders are fully pricing in a rate cut next June, swap market data shows. The probability of an interest rate cut in May 2024 is approximately 80%.
Bill Ackman says a US interest rate cut is possible as early as January-March 2024
Show: Peer-to-Peer Conversations.” The full episode will air December 6th on Bloomberg Television.
The Federal Open Market Committee (FOMC) began aggressively raising interest rates in March 2022. This led to the first rate hike in about 40 years. Even as inflation broadly slows this year, the Fed has yet to cut interest rates.
“As inflation rates slow, real interest rates, which affect the economy, continue to rise,” Ackman said on Bloomberg Television’s “The David Rubenstein Show: Peer-to-Peer Conversations.” This is the current situation,” he said.
He said if the Fed were to keep interest rates in the range of about 5.5% when inflation is trending below 3%, “that would be a very high real interest rate.”
Ackman said he was not convinced that the U.S. economy was headed for a so-called soft landing. “I think there’s a real risk of a hard landing if we don’t start cutting rates soon,” he said, adding he was seeing evidence of a softening economy.
Original title:Bill Ackman Bets Fed Will Cut Rates as Soon as First Quarter(excerpt)
(Updated to add Mr. Ackman’s statement)
2023-11-28 23:30:00
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