Billionaire hedge fund manager Bill Ackman called Friday for the Federal Reserve to begin reining in the support it has provided for the U.S. economy during the coronavirus pandemic. In separate tweets, the head of Pershing Square Holdings, with $13.1 billion under management, said the central bank should start turning off the monetary juice right away. He teed up his position by saying he met last week with officials at the Fed’s New York branch, which houses the trading desk that carries out the wishes of officials regarding interest rates and the monthly asset purchase program.
“The bottom line: we think the Fed should taper immediately and begin raising rates as soon as possible,” he said.
“We are continuing to dance while the music is playing,” Ackman added, “and it is time to turn down the music and settle down.” The statements come just a few days before the Federal Open Market Committee is set to begin its two-day policy meeting Tuesday. For Ackman, insisting on the taper isn’t anything radical: Investors widely expect the FOMC on Wednesday to announce that it soon will start pulling back on its monthly asset purchase program in which the Fed is buying at least $120 billion of bonds. Markets are looking for monthly pullbacks of $10 billion in Treasurys and $5 billion in mortgage-backed securities, possibly starting in November and concluding in the summer of 2022. Calling for interest rate hikes is another matter. Fed officials have stressed that the initiation of tapering shouldn’t be construed as a path to rate hikes. The central bank has been holding its benchmark overnight borrowing rate near zero since the early days of the Covid-19 pandemic, and most FOMC official Bill Ackman said the Federal Reserve should slow down the pace of its asset purchases to support the U.S. economy ahead of a key meeting next week of policy makers. “We think the Fed should taper immediately and begin raising rates as soon as possible,” the billionaire founder of Pershing Square Capital Management said in a series of tweets Friday. “We are continuing to dance while the music is playing, and it is time to turn down the music and settle down.” NN: Its really to late. Its going to take more then stomping on the brakes to shut this inflation wild storm down… like a 500 bases point increase in the Fed Funds rate. They need to do a lot, they need to do its fast and they need to do it now!