Citadel CEO Ken Griffin sees clear political risks in persistent inflation, even at levels that might seem manageable.
While inflation has eased significantly from 9% in 2022 to 2.9% in the latest government CPI report, core PCE prices—the Federal Reserve’s preferred gauge—also rose 2.9% in August, matching July’s climb.
Still, tariffs and other factors are keeping inflation stubbornly high. Griffin predicts it could remain in the mid-2% to 3% range next year, above the Fed’s 2% target.
“The American voters have been exhausted of inflation,” he told CNBC on Thursday.
Inflation was a central issue in Trump’s 2024 reelection campaign, while Biden-era inflation weighed on Democrats. Voters blamed policies such as stimulus spending for high costs, contributing to Republican victories in all seven swing states.
“There’s no doubt that the president and the Republicans came to power on the back of frustration with inflation,” Griffin said. “I would not underestimate how grating a 3% inflation rate could be to tens of millions of American households.”
Inflation could again play a major role in next year’s midterm elections as Republicans work to defend narrow House and Senate majorities. Public sentiment also shows growing dissatisfaction with Trump’s economic record: a recent Reuters/Ipsos poll found just 28% approve of his handling of cost-of-living issues, while a YouGov/Economist survey put his economic approval rating at an all-time low of 35%.
High mortgage rates remain a sore point for Trump. As he looks to the Fed for relief for homeowners, critics caution that political interference with the independent central bank could backfire.
Trump has faced scrutiny for pressuring the Federal Reserve, from public calls to lower interest rates to attempts to replace a sitting governor. Griffin emphasized that preserving Fed independence would serve Trump’s interests.
“If I were the president, I would let the Fed do their job,” he said. “I would let the Fed have as much perceived and real independence as possible, because the Fed often has to make choices that are pretty painful to make.”
Earlier this month, the Federal Open Market Committee cut interest rates by a quarter point to support a slowing labor market. The move followed months of pressure from the Trump administration on Fed Chair Jerome Powell and committee members.
Despite that, President Donald Trump continues to push for further rate cuts, a step that could risk higher prices.
Griffin warned that undermining the Fed could blur lines between the White House and the central bank.
“If the president’s perceived as being in control of the Fed, then what happens when those painful choices have to be made?”
