GOP Megadonor Ken Griffin, who voted for Donald Trump in the 2024 presidential election, has publicly criticized the "risky game," the president is playing by getting involved with the Federal Reserve.
What Happened: Griffin has criticized President Trump for public commentary on the Federal Reserve, which could lose its independence.
In an op-ed in the Wall Street Journal co-authored by Chicago Booth Business School professor Anil Kashyap, the Citadel LLC founder and CEO said the U.S. benefits from "strong economic fundamentals."
"The U.S. built its economic credibility slowly over a long time. Once lost, it won't be easy to regain," Griffin said.
Griffin said the country faces two challenges right now with high inflation and an "unsustainable fiscal trajectory."
The Citadel LLC CEO said Trump has put an emphasis on lower inflation, but his actions are currently undermining the independence of the Federal Reserve, which could risk higher interest rates and higher inflations.
"The president's strategy of publicly criticizing the Fed, suggesting the dismissal of governors, and pressuring the central bank to adopt a more permissive stance toward inflation carries steep costs."
Along with Griffin's comments about the Fed, he adds that the intervention into the Bureau of Labor Statistics heightens risks.
"Mr. Trump's interventions and his dismissal of the head of the Bureau of Labor Statistics have damaged the credibility of official economic data."
Griffins warns that these two items together increase risks and could lead to lower credibility from consumers for these institutions.
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Why It's Important: While most business leaders have steered clear of publicly criticizing Trump and his administration's economic policies, Griffin is not mincing words.
The billionaire, who's wealth of $48.3 billion ranks 34th in the world according to Bloomberg, also called out Trump's tariff policies earlier this year.
"Tariffs open the doors to crony capitalism," Griffin said earlier this year. "I thought that would play out over the course of years. It's terrifying to watch this play out over the course of weeks."
Griffin warned that the administration was being selective on which industries it was targeting and picking "winners and losers."
In the latest op-ed, Griffin uses examples from the U.S. and other regions on what happens when banking policies become politicized.
"History shows the dangers," Griffin said. "In the 1970s, the White House pressured the Fed to keep interest rates artificially low. The central bank's reluctance to tighten policy as inflation accelerated contributed to a prolonged surge in prices."
Griffin said that once "credibility is compromised," it's hard to restore stability while keeping inflation expectations and borrowing costs in check.
The hedge funder also cited the U.K. as an example of what happens when politics get involved in banking and economic data, which has led to a loss of credibility and higher borrowing costs in the country.
"It is in the president's best interest for the Fed to be seen as independent — and to act independently. The independence gives the central bank space to make difficult choices required to curb inflation."
Griffin said credibility remains one of the key items to be preserved when it comes to economic policy.
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