(Bloomberg) -- Billionaire investor Stanley Druckenmiller is concerned that the Federal Reserve has boxed itself into a corner when it comes to future interest-rate cuts.
“I hope the Fed is not trapped by forward guidance the way they were in 2021,” Druckenmiller said Friday by email after US payroll growth for September beat all economists’ estimates. “GDP above trend, corporate profits strong, equities’ all-time high, credit very tight, gold new high. Where’s the restriction?”
The comment by Druckenmiller, 71, who oversees his Duquesne Family Office, built on warnings by other Wall Street figures that markets need to temper expectations about the pace and extent of central-bank easing. Traders reacted to the jobs report by slashing their bets on a big rate cut next month, pricing out chances of a 50 basis-point reduction to match the Fed’s September move. At the same time, Fed policymakers signaled last month that they favored 50 basis points of cuts at their remaining two meetings this year.
At the Grant’s Annual Fall Conference in New York earlier this week, Druckenmiller voiced doubts about whether the Fed should have opted for the half-percentage point cut at its most recent meeting. BlackRock Inc. Chief Executive Officer Larry Fink said earlier this week that the market was too optimistic on Fed easing, citing strong US economic growth.
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