Citadel's Griffin Sees Fed Cutting Rates Once More This Year, 'Two on the Outside'

• Ken Griffin, Citadel's founder and CEO, expects one more Fed rate cut this year, with a second being the upper limit of possibility.
• The forecast follows the Fed's recent 25-basis-point cut in September, which brought the federal funds rate to a target range of 4.0%-4.25%.
• Griffin's view aligns with the median projection from Fed policymakers, reflecting a data-dependent approach amid economic uncertainty.

Citadel founder and Chief Executive Officer Ken Griffin said he anticipates the Federal Reserve will lower interest rates one more time in 2025, characterizing a second reduction as an outside possibility. "I think the Fed will cut one more time this year, two on the outside," Griffin stated, pointing to the evolving economic data and ongoing debates within the central bank.

The comments come on the heels of the Federal Open Market Committee's September meeting, where officials delivered a widely expected quarter-point cut. The decision, which reflected a compromise between members focused on stubborn inflation and those concerned by recent softening in the job market, lowered the benchmark rate to a target range of 4.0% to 4.25%. The accompanying "dot plot" revealed that the median Fed official projects up to two additional cuts by year-end.

Griffin's outlook underscores the delicate balancing act facing Chair Jerome Powell. While inflation has moderated from its peak, it remains above the Fed's 2% target, creating hesitancy for aggressive easing. Conversely, rising unemployment, particularly among younger workers, has injected a note of caution. "The Fed is clearly data-dependent at this stage," said one market strategist familiar with Griffin's thinking. "The door is open for another cut, but it's not a certainty; it hinges entirely on whether the labor market continues to cool."

For a firm like Citadel, which manages over $50 billion in assets, the path of monetary policy is a critical input for its asset management and quantitative trading strategies. Lower interest rates typically reduce borrowing costs, potentially stimulating economic activity and supporting equity valuations. However, they can also compress margins on certain interest-rate-sensitive products. Citadel has navigated the recent volatile period with robust returns, outpacing industry averages through active risk management.

Efforts to reach a Citadel spokesperson for further comment on Griffin's remarks were unsuccessful. The firm's performance and Griffin's influential voice ensure his views are closely watched by investors attempting to gauge the Fed's next move. With the next FOMC meeting weeks away, market participants will be scrutinizing every incoming data point for clues on whether Griffin's base case or his "outside" scenario will prevail.