Pershing Square Capital Management CEO Bill Ackman is calling on the Federal Reserve to take aggressive action to curb inflation, warning that the U.S. economy could collapse unless the central bank changes its posture.
"Inflation is out of control. Inflation expectations are out of control. Markets are imploding because investors are not confident that the @federalreserve will stop inflation," the hedge fund manager began in a lengthy Twitter thread on Tuesday. "If the Fed doesn't do its job, the market will do the Fed's job, and that is what is happening now."
The billionaire said that "the only way to stop today's raging inflation is with aggressive monetary tightening or with a collapse in the economy," arguing that "there is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction."
Ackman went on to blast current and former Fed officials for making dovish comments in recent days, and warned that if the central bank does not change course the U.S. could be on track for "double-digit sustained inflation."
Fed Chairman Jerome Powell has signaled that further rate hikes are on the way at forthcoming meetings, as the central bank tries to curb the highest inflation the country has seen in decades. But Ackman says the Fed has to show that it is serious, after already losing "credibility for its misread and late pivot on inflation."
"That is why I believe there are no buyers for stocks," Ackman tweeted. "How does the downward market spiral end? It ends when the Fed puts a line in the sand on inflation and says it will do ‘whatever it takes.’"
"Markets will soar once investors can be confident that the days of runaway inflation are over," he wrote. "Let's hope the Fed gets it right."