Citadel's Griffin: Inflation Complacency Worrisome

Jun 7 2017 | 10:40pm ET

The rally in U.S. stocks is not over, but investors should start worrying about a return of inflation, Citadel’s Ken Griffin said during a CNBC interview on Wednesday. 

Griffin added that while he felt the business cycle still had some room left to run, the “firepower” available to address the onset of the next recession is going to be limited given the monetary policies pursued by the U.S. Federal Reserve since the financial crisis. 

“We’re not yet at the end of this business cycle,” he said to CNBC. “[But] we’re getting closer to that moment in time with yet an enormous amount of accommodative monetary policy, which means that the degrees of freedom to navigate the next downturn are going to be constrained." 

Meanwhile, investors should also be concerned about rising inflation, Griffin added, noting the very low U.S. unemployment rate and recent increases to the U.S. minimum wages. Unemployment hit a16-year low of 4.3 percent in May, according to U.S. Labor Department data; tight labor markets have historically spawned wage inflation, which in turn has typically been the starting point for inflationary tendencies across the broader economy.

"We need to start to worry about inflation raising its head," Griffin said in the interview. "The complacency about inflation is really I think the one area investors should be most worried about."

Founded by Ken Griffin in 1990 with $4.6 million, Citadel has subsequently grown into a global multi-strategy investment powerhouse that manages more than $26 billion in assets. The company operates within five primary strategies, including fixed income and macro, equities, credit, commodities and global quantitative. The company’s flagship hedge fund gained 5.06% in 2016.

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