Hedge fund Rokos Capital ManagementmoneyclawmachinenearmeRichard Tang, head of global markets at the bank, believes that the Fed is unlikely to relax monetary policy this year.
Tang said the path of inflation has become very unpredictable, especially with the presidential election later this year.moneyclawmachinenearmein the context. The market is currently expecting two interest rate cuts this year.
"It is unlikely that the Fed will be able to cut interest rates this year," Tang said Thursday. "There is a very important presidential election coming up, and it does affect policy, so once you think about all this, whether to cut interest rates or raise interest rates at the next meeting is almost a 50 - 50 bet."
He said central banks had become addicted to providing forward-looking guidance and forecasting had become dangerous for monetary policy makers. He added that recent history shows that markets should not rely on economic data to predict central banks 'next policy moves.
"There is an assumption in the market that you can infer from these data," he said, adding that while Wednesday's U.S. CPI data seemed to moderate, the six-month rolling CPI was still close to 4.moneyclawmachinenearme.1%, which is still a long way from the Federal Reserve's 2% target.
In addition, he said the policies of any administration could drive up inflation, and uncertainty about the Trump administration's potential tariff actions made it particularly difficult for the central bank to price future policy actions.
Previously, Citadel founder Ken Griffin said that neither Donald Trump nor Joe Biden is likely to reduce U.S. federal spending, which poses a major obstacle to reducing U.S. inflation.
"We are in a new system," Tang added. "The traditional correlations of econometric models no longer apply. I don't think anyone really knows how inflation actually forms."
Billionaire Chris Rokos manages one of the world's largest macro hedge funds with assets exceeding $17 billion. The fund he manages is known for its large bets and high confidence, and is up 20% so far this year.
