Bill Ackman: Fed won't meet inflation goal without 'deep, job-destroying recession'

12.15.22 - Is a 'deep, job-destroying recession' on the horizon?

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Bill Ackman: Fed won't meet inflation goal without 'deep, job-destroying recession'

-Yahoo!Finance--Hedge fund manager Bill Ackman believes the Federal Reserve's 2% inflation target is unattainable without severe pain for the U.S. economy.

The Pershing Square Capital founder and CEO said in a tweet Wednesday it would take a "deep, job-destroying recession" for inflation to return to that level, which marks the U.S. central bank's long-term price stability goal.

"Even if it gets back to 2%, it won't remain stable there for the long term," Ackman said after the Fed's latest rate hike, also adding that target was "no longer credible." "Accepting 3% +/- inflation is a better strategy for a strong economy and job growth over the long term."

The Fed raised interest rates by half a percentage point to a range of 4.25%-4.5% on Wednesday, the seventh and final time monetary policy makers lifted their benchmark policy rate in 2022. The cumulative 4.25% increase in interest rates this year marked the most since 1980.

Following the decision, Fed Chair Jerome Powell said further hikes were likely coming in the new year, emphasizing the central bank would proceed with tightening financial conditions as long as needed to hit its inflation goal.