Ken Griffin Says Fed Needs 4% Inflation This Year to Avoid Recession

(Bloomberg) -- Citadel founder Ken Griffin said the Federal Reserve will be able to ease off monetary tightening if inflation drops to 4% by year-end.

That “will give the Fed much more latitude in policy,” Griffin said Monday in a wide-ranging interview with Bloomberg's Erik Schatzker at the Milken Global Conference in Beverly Hills. But if it remains near or above the current 8.5%, the central bank “will have to the hit brakes pretty hard,” tipping the economy into recession.

The billionaire also highlighted the big disconnect in the labor market, noting there are twice as many job openings than unemployed people seeking work. That will put even more upward pressure on wages, further exacerbating inflation, he said. That the economy isn't pulling more people off the sidelines of the job market is a “real problem,” he said.

Griffin, 53, also said cryptocurrencies are the “great hot spot” of debate within his Chicago-based firm, noting that most employees who are younger than he are big believers in digital assets.

“They believe that cryptocurrency has an important role in the global economy as a means of facilitating payment,” said Griffin, who has previously expressed skepticism about the value of digital tokens. “These are really sharp people,” he added. “I have to live with the reality that an asset is worth what people perceive it to be worth.”

A major campaign contributor to Republicans, Griffin also weighed in Florida's recently enacted “Don't Say Gay” law and Governor Ron DeSantis's move to restrict Walt Disney Co.'s special tax status in the state. While Griffin agreed with the legislation banning discussion of sexual orientation and gender identity in classrooms with young students, he said the move to strip Disney of certain privileges smacks of retaliation for the company's opposition to that law.

Other highlights from the interview:

Griffin bemoaned what he called mismanagement of energy policy in the West that has limited fossil-fuel production, in part through regulation and the discouragement of financing, leaving Europe reliant on Russia for its natural gas. This has caused a “price shock” that's endangering the life dreams of tens of millions of people, he said.
He blasted social-media curators for having “eroded free speech,” and anticipates that fellow billionaire Elon Musk will help to address that if he succeeds in his acquisition of Twitter Inc.
Griffin said today is a “tough time” for investors seeking to deploy capital as equity markets are tumbling, shrinking the overall pie. The key is to be “quick” and “nimble” to take advantage of trading opportunities. The next couple of months will be “incredibly telling,” he said. “It's been an environment where we believe that holding stock outright long is likely to be a punishing experience,” he said.

Click here to read the TOPLive blog.