Hedge fund billionaire Ken Griffin ― reportedly worth more than $40 billion ― has warned how Donald Trump’s attacks on the Federal Reserve could backfire.
The Citadel CEO, in a joint Wall Street Journal op-ed with Chicago Booth Business School professor Anil Kashyap, cautioned that “the president’s strategy of publicly criticizing the Fed, suggesting the dismissal of governors and pressuring the central bank to adopt a more permissive stance towards inflation carries steep costs.”
Trump’s bid to seize control of monetary policy so that he can slash interest rates is a “risky game,” per the title of Griffin and Kashyap’s piece. They pointed to how former President Richard Nixon’s similar pressure on the Fed in the 1970s “contributed to a prolonged surge in prices.”
“It is in the president’s best interest for the Fed to be seen as independent—and to act independently,” they added, predicting how “in a worst-case scenario, if the Fed visibly bows to political pressure and permits inflation to rise unchecked, tens of millions of retired Americans will see their savings diminished” which “could cost the administration dearly in the midterms.”
“Credibility in economic policymaking is built slowly, through practice and respect for processes, and can be lost quickly if those processes are disregarded,” they concluded. Read the full op-ed here.
