US Hedge Fund Investor Says "Fed Should Raise Benchmark Interest Rate by 0.5%P in March"

Bill Ackman

[Asia Economy Reporter Park Byung-hee] Bill Ackman, a famous American hedge fund investor, argued that the U.S. central bank, the Federal Reserve (Fed), should raise the benchmark interest rate by 0.5 percentage points at once in March to curb inflation.

According to Bloomberg on the 16th (local time), Ackman stated on Twitter that the Fed is losing the battle against inflation and made this claim.

Ackman said that a 0.5 percentage point rate hike would reduce inflation expectations and also help mitigate the need for more painful and aggressive economic measures in the future.

He emphasized that due to indecisive people, the Fed is losing credibility as an 'inflation fighter,' and although it may come as a 'shock and awe' to the market, the Fed must show its determination to solve inflation through a 0.5 percentage point rate hike.

The last time the Fed raised the benchmark interest rate by more than 0.25 percentage points at once was in May 2000.

Famous economist Henry Kaufman also argued that the Fed Chair should be tough, immediately raise rates by 0.5 percentage points, and clearly indicate that further hikes will follow.

With the U.S. consumer price inflation rate reaching the 7% range for the first time since 1982 last month, calls for the Fed to raise the benchmark interest rate are growing. Recently, Fed officials have repeatedly stated that the benchmark rate should be raised in March when quantitative easing policies end. According to the dot plot from last month's Federal Open Market Committee (FOMC) meeting, Fed officials expected three rate hikes this year.

However, as inflation continues to surge, expectations are growing that the number of rate hikes will increase. Goldman Sachs predicted in a report on the 9th that the Fed would raise rates four times this year, forecasting hikes in March, June, September, and December.

Jamie Dimon, CEO of JP Morgan Chase, said at a meeting with analysts on the 14th that he believes the Fed could raise rates up to seven times in the future.