Bill Ackman Just Said 4 Words Blasting the Fed's Latest Rate Hike: "Just Made a Mistake." Here's Why He Thinks Higher Rates Could Backfire on AI-Driven Inflation.

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Ackman Warns Fed’s Rate Hike Could Backfire on Inflation

Higher rates may fail to cool AI-driven inflation, says Bill Ackman, with local implications for rand and tech sectors.

Bill Ackman’s blunt claim that the Fed “just made a mistake” with its recent rate hike deserves attention. His argument revolves around AI firms’ relentless spending on computing power to chase artificial general intelligence (AGI). The key here is inelastic demand—these companies will spend regardless of higher borrowing costs. For South Africa, this means the usual pathway where higher global rates slow spending and ease inflation may be broken. The rand could struggle against the dollar if US inflation remains sticky, squeezing import costs and complicating South Africa’s inflation fight. On the JSE, tech-heavy counters like Naspers and Prosus may see earnings pressure if higher global borrowing costs translate into tougher conditions for their international operations, although their heavy cash reserves might offer some buffer. Financial shares like Standard Bank or FirstRand might fare better if the SARB can keep rates higher to support the rand. This view could be wrong if AI investment slows unexpectedly or if new Fed leadership changes policy trajectory. this is just our opinion and not financial advice