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Ackman's comments come after the Fed announced a 75-basis-point
rate increase in interest rates on Wednesday. That coupled with
earlier actions have now jacked the overnight interest rate from
near zero to a level between 2.25% and 2.50%.
Chairman Jerome Powell said that he could now allow the central
bank to begin to slow the pace of rate increases, depending on
inflation. However, he cautioned that an "another unusually
large rate increase could be appropriate" when the Fed next
meets if inflation does not begin to slow.
In a thread of tweets, Ackman dismissed the Fed's stance on
interest rates as "extremely accommodative", and said higher
rates are required to kill inflation, which is currently
hovering around 9%.
"I don't think there is any prospect of getting back to 2%
without materially higher rates, 4% or more, which are
maintained at these levels for extended periods. I am puzzled to
understand how the Fed believes that we are already at neutral,"
Ackman said in his tweets.
His tweets come on the same day as the U.S. reported a GDP
contraction, a figure which could deter the Fed from continuing
to aggressively increase interest rates as it battles high
inflation.
The U.S. GDP fell at a 0.9% annualized rate last quarter.
Economists polled by Reuters had forecast GDP would rebound at a
0.5% rate.
Link to Ackman's Twitter thread on interest rates: https://bit.ly/3cPFQIe
(Reporting by Shubham Kalia and Shivani Tanna in Bengaluru;
Editing by Simon Cameron-Moore)
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