The Tell: Bill Ackman says Fed is likely done hiking interest rates as U.S. economy is starting to slow

by | Oct 2, 2023 | Stock Market

Pershing Square Capital Management founder Bill Ackman said he believes the Federal Reserve won’t be raising borrowing costs again this year as the central bank’s most aggressive campaign of interest-rate hikes since the 1980s is finally causing the U.S. economy to slow. During an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box,” Ackman said that the “Fed is probably done. I think the economy is starting to slow.”

A recession that was widely seen on Wall Street as inevitable has so far failed to materialize this year. However, economists have warned that the delayed effects of the Fed’s rate increases may finally be starting to slow the labor market, while gauges of manufacturing activity have shown signs of weakness. Investors will receive another update on the state of the U.S. labor market on Friday. Since March 2022, the Fed has raised its target policy rate by more than 5 percentage points. In July, the target reached its highest level in 22 years. Since the start of 2023, consumer bankruptcy filings, as well as filings for businesses, have picked up. Delinquency rates for consumer loans like credit cards and auto loans have also risen. Ackman said higher interest rates on loans are starting to be felt as consumers and businesses are finally being forced to refinance with higher costs. “The economy is still solid…it’s definitely weakening. Seeing lots of evidence of weakening in the economy,” he said. The Fed left its policy rate on hold following its September meeting, while signaling that it plans to keep interest rates above 5% for longer than investors had previously expected. It is projections were widely blamed for exacerbating a surge in long-dated Treasury yields that r …

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