Bill Ackman: Fed should raise rates above expectations for credibility

Billionaire investor Bill Ackman said the US Federal Reserve should raise interest rates by 50 basis points.

In a statement on the subject on social media, Ackman stated that a 50 basis point increase in interest rates would have a reactive effect on reducing inflation expectations, adding that "with this step, the Fed will avoid more aggressive and economically painful steps in the future."

In December, Fed officials predicted three rate hikes this year. The Fed is expected to start interest rate hikes in March as inflation remains at its highest level since the 1980s. Expectations of more than 3 interest rate hikes are also dominant in the markets.

Expressing that the Fed has lost its credibility in terms of inflation, Bill Ackman stated that the 50 basis point interest rate hike to be made in the first place will surprise the markets and will be important for the solution of the inflation problem.

Jamie Dimon, CEO of JP Morgan Chase, said the previous day that the Fed should raise interest rates 6-7 times this year to fight inflation. The probability of four interest rate hikes in 2022 is increasing, and many banks have increased their rate hike forecasts for this reason.

Consumer prices in the US rose 7 percent annually in 2021 to the highest level in 40 years. Fed Chairman Jerome Powell stated that necessary steps will be taken to prevent the increase in inflation and used the phrase, "If we need to raise more interest rates, we will do it."