Bill Ackman, the billionaire founder of Pershing Square Capital Management, anticipates the Federal Reserve to initiate interest rate cuts sooner than market predictions.

What Happened: Ackman predicts the rate cuts could take place as early as the coming quarter, Bloomberg reported. Currently, market data from swaps suggests an 80% likelihood of a rate cut by May, with traders fully expecting a cut by June.

Despite the steepest rate hike in 40 years that started in March 2022, the central bank has yet to implement any rate cuts, even amid a general slowdown in U.S. inflation this year.

Ackman expressed his apprehensions about the real rate of interest rising while inflation is on the decline during an upcoming episode of The David Rubenstein Show: Peer-to-Peer Conversations.

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He cautioned that if rates are maintained around the 5.5% range while inflation drops below 3%, it could result in a significantly high real rate of interest.

"I think there's a real risk of a hard landing if the Fed doesn't start cutting rates pretty soon," said Ackman.

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Collage created using photo by Center For Jewish History, NYC on Wikimedia and engin akyurt on Unsplash