'Little Buffett' Bill Ackman: "Fed to Start Rate Cuts in Q1 Next Year"

"If Interest Rates Are Not Lowered Quickly, There Is a Risk of Hard Landing"

Bill Ackman, chairman of Pershing Square Capital and a giant in the hedge fund world known as the "Little Buffett," stated on the 28th (local time) that the U.S. Federal Reserve (Fed) will begin cutting interest rates in the first quarter of next year.

On the same day, Ackman appeared on Bloomberg TV's David Rubenstein Show and said that the Fed could lower rates faster than the market expects.

He said, "There is evidence of a slowdown in the U.S. economy," and predicted, "If the Fed does not start cutting rates fairly quickly, there is a risk of a hard landing." He added, "As inflation slows, real interest rates continue to rise, which is affecting the economy," explaining, "If inflation falls below 3% in the future and the Fed keeps rates in the 5.5% range, real interest rates will be very high."

The U.S. inflation rate is currently slowing. The October Consumer Price Index (CPI) rose 3.2% year-on-year, down from 3.7% in the previous month. The core Personal Consumption Expenditures (PCE) for October, to be released on the 30th, is also expected to continue slowing, rising 3.5% year-on-year and 0.2% month-on-month. Core PCE is one of the inflation indicators closely watched by the Fed.

As inflation eases, the market expects the Fed to start cutting rates in the first half of next year. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on this day reflected more than a 65% chance that the Fed will cut rates by at least 0.25 percentage points in May next year. This is a much higher figure than the 50% range seen the previous day.

Christopher Waller, a Fed board member known as a representative hawk (favoring monetary tightening), also mentioned rate cuts on the same day. Attending an event hosted by the American Enterprise Institute (AEI) in Washington, DC, he said, "Inflation is moving at almost the pace I expected," adding, "If this movement continues for several months, such as 3 to 5 months, the Fed could start cutting policy rates simply because inflation has decreased."