Billionaire investor Bill Ackman expects the Federal Reserve will have to cut interest rates early and often in 2024, seemingly confirming the market’s outlook for much looser monetary policy.
“Right now, with inflation coming down very substantially, the real cost of money is very high right now. So I think they’re going to have to move early,” the head of Pershing Square Capital Management said Friday morning during a CNBC “Squawk.” Box” interview. “We certainly could have made more than three cuts.”
After the December meeting, Fed officials said they could enact rate cuts of three-quarters of a percentage point this year, followed by several other moves over the next two years to lower short-term interest rates to neutral.
However, markets have priced in a much more aggressive arc.
Traders in the Fed Funds futures market expect six cuts this year, with an 83 percent chance the first will happen in March, according to CME Group. FedWatch meter.
However, there is debate as to whether this is an accurate view.
Larry Fink, CEO of BlackRock, told CNBC earlier Friday that he thinks central bankers will be reluctant to move too quickly.
“I think the Fed will be more accommodative. I don’t think we’ll see three cuts this year,” Fink said. “Unless we have some real major economic change, I think we should probably wait [the first rate cut] until June”.
Fed officials could decide to “relax a little bit and just see what happens,” he added.
Both Ackman and Fink said they believe an easier Fed will benefit stocks.
“I think it’s good for stocks as long as they cut interest rates fast enough to avoid a meaningful recession,” Ackman said.