Citadel CEO Ken Griffin says he feels 'anxious' about 2023's stock market rally – and warns the impact of higher interest rates will soon hit hard

• Billionaire hedge-fund manager Ken Griffin said he's unsure if the stock market rally can last.
• "I'm a bit anxious that this rally can continue," the Citadel CEO told CNBC.

Billionaire hedge-fund manager Ken Griffin says he doesn't see the stock market rally of 2023 lasting for much longer as the impact of higher interest rates will soon hit hard.

Indices including the S&P 500 and Nasdaq 100 have surged about 17% and 41% respectively this year. The jump in stocks has been fueled by an AI tech boom, and hopes the Federal Reserve may soon stop raising interest rates as inflation falls.

"I'm a bit anxious that this rally can continue," the Citadel CEO told CNBC's "Squawk on the Street" Thursday.

"Obviously one of the big drivers of the rally has been ... just the frenzy over generative AI, which has powered many big tech stocks. I like to believe that this rally has legs, I'm a bit anxious we're in the seventh or eighth inning of this rally," he added.

Griffin noted the resilience of the US economy and stock market in the face of the Fed aggressive interest rate hikes over the past year – but pointed out that it typically takes two years for borrowing cost increases to filter through the economy.

"It's not instantaneous," Griffin said.

The Fed has already raised rates from near-zero levels to upwards of 5% since early 2022 in a bid to cool inflation. It's tight policy has worked in taming price pressures from 40-year highs, yet inflation remains above the Fed's target at 3.7% annually.

"We're now at the point where we're going to see the impact of these hikes really start to play out. We're seeing the job market starting to weaken," Griffin said.