The US Federal Reserve is likely to drop its 2% inflation goal and shift to a higher figure as government policy actions and the artificial intelligence boom create an inflationary environment, according to billionaire hedge fund manager Bill Ackman.
Ackman, chief executive officer of Pershing Square Capital Management, dismissed as “fiction” the notion that US inflation will return to the 2% level.
“I think the Fed will abandon the goal of 2%. I think 3%, 2.5% – something along these lines – will become the centralised goal in the United States,” Ackman said at the UBS Asia Wealth Forum 2026 in Singapore on January 12. He made the remarks during a fireside chat with Iqbal Khan, co-president of UBS Global Wealth Management and president of UBS Asia Pacific.
Ackman is sceptical that the Fed, which cut interest rates three times in 2025, will continue lowering borrowing costs.
“The world is expecting a couple more cuts from the Fed. I’m a little more less of a believer there,” he said.
According to Ackman, “many powerful economic forces”, including the Trump administration’s pro-business policy of lower taxes and deregulation, and the massive investments in AI, are driving growth and that “at least some part of it is inflationary”. He argued that this growth will help resolve US indebtedness.
“Now of course, AI itself is a major productivity tool, major cost production tool. There are some countervailing effects, but I don’t think they’re [the Fed] heading back to meaningful low rates,” he said.
Diversifying investments
UBS chief investment officers echoed Ackman’s bullish view of AI.
“The [AI] investment is going to continue,” said Mark Haefele, CIO of UBS Global Wealth Management, one of the speakers at the forum.
“However, because more of it is financed by debt, because there has yet to be shown this profitability for AI, we’re watching this very closely, and we want to diversify our AI exposure,” he added.
He explained that this means assessing which companies in sectors like banking and supply chain management will use AI to boost profitability, and which ones will be completely disrupted by the technology.
Haefele also recommended diversification of investment portfolios. “We would say, don’t just bet on equities.”
He said that gold is still a favoured diversifier asset, as are industrial metals such as copper and aluminium.
Asia’s growth drivers
Tan Min Lan, head CIO in Asia Pacific at UBS Global Wealth Management, predicted that AI-related manufacturing in Asia, notably in Taiwan, Korea and China, along with efforts by Chinese policymakers to focus on domestic consumption, innovation and higher-quality sustainable development, will drive economic growth in Asia.
She observed that the structural economic transition in China has started to pay off.
“The digital economy is now bouncing back rapidly. It now accounts for over to 25% of GDP in China, surpassing the property sector,” she said.
She also noted that China has found new markets in Africa, Southeast Asia and Europe to buffer the decline in its direct export exposure to the US.
She expects Asia’s economy to expand around 5% this year, widening the region’s growth premium over developed markets.
