© Reuters. Kyle Bass Says Fed Will Need to Cut in 2023 Due to Likely Recession
By Sam Boughedda
Founder and chief investment officer at Hayman Capital, Kyle Bass, told CNBC in an interview on Thursday that he believes the Fed will need to cut rates in 2023.
The closely watched investor described the Fed’s reaction to Covid as “kneejerk” but also stated it was “let’s say necessary.” However, he added that they are now struggling to work out how to take the extra 40% of the money they put into circulation back.
A “decade of bad policy” means we will see increased food and energy prices while the economy is cooling off, added the investor.
Bass expects a shallow recession towards the end of the year or early 2023 and said the Fed won’t hike rates much over 200 basis points before they need to reverse course.
The investor, who also founded Conservation Equity Management, pointed to Wednesday’s minutes, explaining to CNBC that Fed staff is still projecting 2.8% growth in 2022, which he believes is wrong, meaning the Fed will need to cut in 2023 due to a stagflationary situation.