Citadel’s Ken Griffin says Fed rate hikes like ‘having surgery with a dull knife’

Billionaire Citadel founder Ken Griffin said the Federal Reserve still faces a difficult road in its effort to tame inflation through a rapid series of rate hikes.

Griffin compared interest rate hikes to “having surgery with a dull knife” for the US economy – shortly after Fed Chair Jerome Powell warned on Capitol Hill that rates will likely need to rise “higher than previously expected” to bring down prices.

“It is a really difficult tool to get the job done with, because you hit the housing sector, you hit the manufacturing sector, you hit parts of the economy that have a very high sensitivity to interest rates and you tend to leave the rest of the economy relatively untouched,” Griffin said during an interview with Bloomberg on Tuesday.

Griffin added that the US economy has a “setup for a recession unfolding” as American households contend with the fallout of a “traumatic” inflation spike over the last year.

Powell’s remarks to Congress opened the door for the Fed to implement a supercharged half percentage point interest rate hike at its next meeting on March 21. Prior to his comments, the market was anticipating a smaller quarter-point hike.

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell said.

Griffin told Bloomberg that the Fed is in “uncharted territory” – and urged Powell to be careful with his remarks about the central bank’s policy path.

“If I could tell one thing to the chairman, I would tell him to say less,” Griffin said.

“Every time they take the foot off the brake, or the market perceives they’re taking their foot off the brake, and the job’s not done, they make their work even harder,” Griffin added. “At the same time, remember, they’re impacting in a very harsh way a very small part of the economy.”

Griffin has a personal net worth of $32.6 billion, according to Forbes.