Billionaire investor Bill Ackman, the CEO of Pershing Square, has taken to Twitter to urge the Federal Reserve to pause on raising interest rates at its upcoming meeting.
Ackman’s tweet is a response to recent events in the financial industry that have seen three US banks close in a week, wiping out equity and bond holders, and the demise of Credit Suisse and the zeroing of its junior bondholders.
In his tweet, Ackman notes that bondholders bearing losses is a new phenomenon as they were protected in the Global Financial Crisis. He also points out that the banking crisis remains unresolved and higher rates won’t help. Ackman suggests that the best course of action is a temporary FDIC deposit guarantee until an updated insurance regime is introduced.
The billionaire investor believes that the recent events have had a meaningful tightening of financial conditions that has not yet been visible, and the effect of this is not yet fully known. He suggests that the Fed should make it very clear that this is a temporary pause so that the impact of recent events can be assessed. Ackman further suggests that Powell, the head of the Fed, should make clear that his intent is to resume raising rates at the next meeting unless the banking crisis remains unresolved and has on its own sufficiently slowed the economy.
Ackman’s tweet highlights the importance of financial stability, which is the Fed’s first responsibility. The billionaire investor argues that this is not an environment into which the Federal Reserve should be raising rates and adding additional pressure on the system. Ackman’s tweet suggests that the Fed needs to be mindful of the current situation and take appropriate action to ensure financial stability.
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This article was republished from azcoinnews.com
