Fed needs to 'act decisively to kill inflation': Bill Ackman

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Pershing Square Capital Management CEO Bill Ackman is calling on the Federal Reserve to take more aggressive action to tame scorching-hot inflation in order to restore consumer confidence. 

"Business is a confidence game. Consumer confidence is weak because of inflation, not because of the economy. Jobs are plentiful and the economy is strong," the billionaire hedge fund manager tweeted on Wednesday. "The @federalreserve needs to act decisively to kill inflation and inflationary expectations. Then confidence can be restored."

The latest tweet comes after Ackman warned in May that inflation and inflation expectations are "out of control" and emphasized that if the central bank didn't do its job, the economy could collapse.  

The consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 8.6% in May from a year ago, the fastest pace of inflation since December 1981.

GDP CONTRACTION DEEPENS GIVING FRESH RECESSION CLUES AMID SOARING INFLATION

On Tuesday, the Conference Board reported that its consumer confidence index fell to a reading of 95.2 in June — the lowest level since February 2021. 

The survey found that 19.6% of respondents view current business conditions as "good", compared to 23% who said they were "bad." About 15.9% of consumers surveyed expect their incomes to increase in the short-term, while 15.2% expect their incomes to decrease. 

"Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices," the Conference Board's senior director of economic indicators Lynn Franco said in a statement. "Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by yearend."

Goldman Sachs, Bank of America, Deutsche Bank have raised the odds of an economic downturn in 2022 or 2023

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Earlier this month, Fed officials voted to raise interest rates by 75 basis points for the first time since 1994. The move puts the key benchmark federal funds rate between 1.50% and 1.75%, the highest since the pandemic began two years ago. 

Federal Reserve chairman Jerome Powell told reporters at a press conference following the policy-setting meeting that another increase of 75 basis points or 50 basis points is on the table for July. Officials expect the benchmark federal funds rate to hit 3.4% by the end of the year and 3.8% by the end of 2023, a big increase from their March projections.

Ackman expressed support for the 75 basis point hike earlier this month, but emphasized that 100 basis point hikes going forward would be "even better."

"The sooner the @federalreserve can get to a terminal FF rate and thereafter can begin to ease, the sooner the markets can recover," he added at the time. 

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