Citadel’s Ken Griffin says the Fed shouldn’t cut too quickly, citing big tailwinds supporting inflation

Ken Griffin, Citadel founder and CEO, thinks the Federal Reserve should move slowly to cut interest rates in its fight against stubborn inflation.

“If I’m them, I don’t want to cut too quickly,” Griffin said at the International Futures Industry conference in Boca Raton, Florida on Tuesday. “The worst thing they could end up doing is cutting, pausing and then changing direction back towards higher rates quickly. That would, in my opinion, be the most devastating course of action that they could pursue.”

“So I think they are going to be a bit slower than what people were expecting two months ago in cutting rates. I think we are seeing that play out,” he added.

His comment came as data showed inflation rose again in February, with the consumer price index climbing slightly higher than expected on an annualized basis. The uptick in price pressures could keep the Fed on course to wait at least until the summer before starting to lower interest rates.

The billionaire investor said there are significant inflationary forces in place that keep prices elevated.

“We still have an enormous amount of government spending. That’s pro inflationary. And we are also going to a period in history of deglobalization. So we’ve got two big, big tailwinds that continue to support the inflation narrative,” Griffin said.

While the inflation rate is well off its mid-2022 peak, it still remains well above the Fed’s 2% goal. Fed officials in recent weeks have signaled that rate cuts are likely at some point this year and have expressed caution about letting up too soon in the battle against high prices. 

The Fed’s next two-day policy meeting takes place in a week.

Citadel’s flagship multistrategy Wellington fund gained 15.3% last year.