- The Fed needs to stay on the course with its monetary policy, Citadel founder and CEO Ken Griffin said.
- Griffin said the Fed should not veer from its path of rate hikes until inflation is conquered.
The US Federal Reserve changing course on hiking interest rates would be a mistake, Ken Griffin, the billionaire founder and CEO of hedge fund giant Citadel said Tuesday.
Griffin was speaking at the Bloomberg New Economy Forum in Singapore, where he said the Fed's interest rate hike policy was like taking a course of antibiotics. "If we take the foot off the brake, we don't finish the course of antibiotics, and inflation starts to flare back up, the Fed will have lost credibility," he said.
Doing so would be "the absolute worst mistake the Fed could possibly make" and could cost the Fed its credibility, Griffin added.
His comments followed a lower-than-expected inflation rate of 7.7% in October, according to the Bureau of Labor Statistics. This development has prompted some experts — including Chicago Fed president Charles Evans and Fed Vice Chair Lael Brainard — to say the Fed should start slowing its pace of rate hikes.
If inflation starts to tick back up should the central bank veers from its path rate hikes, the Fed would have to raise rates by a higher amount to cool the economy, said Griffin. "We shouldn't put ourselves in a position to pay that bill. We should get the job done now," he added.
Griffin's views sharply contrast against those of Ark Invest CEO Cathie Wood, who said in a string of tweets Saturday that the Fed runs the risk of sparking a major US downturn — just like the Great Depression — if it does not pivot from its monetary tightening path despite cooling inflation.