Billionaire hedge fund manager Bill Ackman says inflation will only be stopped if the Federal Reserve acts aggressively or the stock market crashes.
The Fed should immediately raise rates to neutral and commit to continue to hike borrowing costs until “the inflation genie is back in the bottle”. The Fed has indicated similar 50 basis point rate increases are likely at its next few meetings.
The Pershing Square hedge fund manager attributed 2022′s market correction to investors’ lack of confidence that the central bank could squash a 40-year high in inflation. He said the market turmoil will only end if the Fed “puts a line in the sand” on soaring prices.
Ackman believes at this point investors will cheer the Fed raising rates more rapidly because inflation is spiraling out of control and markets will soar once investors can be confident that the days of runaway inflation are over.
In March 2020 during the depths of the Covid pandemic, Ackman made $2 billion betting against the market then.