Tariffs Still Filtering Through the Economy
Speaking on CNBC’s Money Movers, Griffin said only about half of the inflationary impact from President Donald Trump’s tariffs on U.S. trading partners has passed through the economy. That means consumers could still face higher prices in the months ahead.
"The inflationary impulse from tariffs has only passed about 50% through the economy at this point. It’s still coming," Griffin said. "The consumer’s going to pay.... I would not underestimate how grating a 3% inflation rate could be to tens of millions of American households."
Tariffs raise the cost of imported goods, and those costs are often passed along to consumers. Griffin estimated that inflation in 2026 will likely remain in the mid-2% to 3% range, above the Fed’s long-run 2% target.
Rate Cuts: One More, Maybe Two
The Fed last week approved its first rate cut of 2025, citing slower job growth, and signaled two more cuts could follow this year. But Griffin is skeptical. He expects only one more quarter-point cut, with a slim chance of a third.
That cautious outlook reflects the Fed’s balancing act: weaker job growth on one side, and sticky inflation on the other. The central bank’s dual mandate — stable prices and maximum employment — is being tested.
Independence Under Pressure
Griffin also weighed in on the growing political pressure facing the Fed. Trump has repeatedly criticized the central bank for not cutting rates more aggressively, nicknaming Fed Chair Jerome Powell "Too Late Powell." The president has also attempted to fire Fed Governor Lisa Cook and appointed advisor Stephen Miran, raising questions about the Fed’s traditional independence.
Griffin argued that maintaining both the perception and reality of independence is critical for the Fed’s credibility.
"If I were the president, I would let the Fed do their job, and 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," he said. "If the president’s perceived as being in control of the Fed, then what happens when those painful choices have to be made?"
Investor Takeaway
For investors, Griffin’s comments highlight two key risks:
- Tariff-driven inflation could linger longer than markets expect, keeping consumer prices elevated.
- Fed policy may be less dovish than some anticipate, with only modest easing likely this year.
At the same time, political pressure on the Fed adds another layer of uncertainty. If independence is compromised, markets could lose confidence in the central bank’s ability to manage inflation and employment without political interference.
The Bottom Line
Ken Griffin’s message is straightforward: tariffs are still working their way through the economy, inflation may stay above target, and the Fed should be left to make tough calls without political meddling. For investors, that means preparing for a policy path that may be less aggressive on rate cuts — and more volatile if Fed independence comes into question.