Bill Ackman sees risk of hard landing if Fed doesn’t start cutting soon

Hedge fund manager Bill Ackman, fresh off his prescient call this summer to short bonds, now said he expects the Fed to start cutting interest rates much sooner than the market anticipates or the economy faces the risk of a “hard landing”, Bloomberg News reported.

Ackman, the founder of Pershing Square Capital, said the Fed could start cutting rates in the first quarter of 2024, versus a June cut which is widely expected by the market.

The hedge fund manager, who will be speaking on an upcoming episode of The David Rubenstein Show: Peer-to-Peer Conversations, cited that the real rate of interest keeps rising. This, according to Ackman, is what impacts the real economy.

Ackman said the current 5.5% federal funds rate rate, versus a 3% inflation rate, is a “very high real rate of interest.”

The hedge fund manager stated he sees the risk of a hard landing if the Fed doesn’t start cutting rates soon as he is already seeing evidence of a weakening economy.

“I think there’s a real risk of a hard landing if the Fed doesn’t start cutting rates pretty soon,” Ackman commented.