Billionaire Ken Griffin said the setup for a US recession is unfolding, with the Federal Reserve needing to raise interest rates further after Americans were stung with “traumatic” levels of inflation. 

The founder of Citadel and Citadel Securities said the Fed is limited in how much it can fight inflation with interest-rate increases, likening the tool to “having surgery with a dull knife.”

“We have the setup for a recession unfolding,” he said in an interview with Bloomberg on Tuesday in Palm Beach, Florida.

Fed Chair Jerome Powell said in congressional testimony earlier Tuesday that the central bank is likely to raise interest rates higher than previously thought after stronger-than-expected economic data, causing stocks to decline. 

Griffin said he would advise Powell to say “less” on inflation. 

“Every time they take the foot off the brake, or the market perceives they’re taking their foot off the brake, and the job’s not done, they make their work even harder,” Griffin said.

Griffin predicted in 2020 that US markets would struggle with rampant inflation. He said his firm is not far away from current market consensus on price growth. 

Griffin, 54, has a net worth of $36.7 billion, according to the Bloomberg Billionaires Index.

Written by:  and  @Bloomberg.com