(Bloomberg) — Citadel founder Ken Griffin said the Federal Reserve should move slowly in lowering interest rates to avoid the possibility of having to reverse course later.
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“Pausing and then changing direction back toward higher rates quickly, that would, in my opinion, be the most devastating course of action to pursue,” Griffin said Tuesday at the Futures Industry Association conference in Boca Raton, Florida. “So I think they’re going to be a bit slower than people were expecting.”
Federal Reserve Chair Jerome Powell last week suggested the central bank is getting close to the confidence it needs to start lowering interest rates.
“We’re waiting to become more confident that inflation is moving sustainably at 2%,” Powell said Thursday while answering questions from the Senate Banking Committee. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.”
In the wide-ranging interview, Griffin also said Citadel’s participation in this month’s rescue of New York Community Bancorp was the “right price” for the investment. Citadel Global Equities, part of Griffin’s hedge fund empire, is one of the firms backing the $1 billion deal, which was led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital.
On politics, Griffin said former President Donald Trump would win the US election if it were held today, but he declined to say whether he would endorse him and is waiting to see what policies Trump will propose. The former president’s previous tariff policies were “regretful,” Griffin said, but added that overall a Trump administration would be good for capital markets.
“I’m very critical of the policies of this administration,” Griffin said, referring to the Biden presidency. “I want to hear what Trump’s going to do for the United States. I want to see what his policy platform looks like.”
Griffin, who has a net worth of more than $37 billion according to the Bloomberg Billionaires Index, founded the hedge fund Citadel in 1990. He later established Citadel Securities LLC, the trading firm that serves asset managers, banks, broker-dealers, hedge funds, government agencies and public pension programs.
The trading firm came into prominence in the era of meme stocks, and is responsible for about a third of all US retail stock trades. Now, Citadel Securities is ramping up its presence across fixed income beyond interest-rate swaps and Treasuries to serve institutional investors in corporate debt trading starting with investment-grade bonds.
The market-making firm is considering becoming a public company one day, Griffin said on Tuesday. “Unquestionably, in the decades to come it will happen, but here, now, it’s a debate.”
Read More: Citadel Securities Taps Wall Street Talent to Expand Credit Unit
(Updates with comments on Trump in sixth and seventh paragraphs.)
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