Head of hedge fund Pershing Square Bill Ackman predicted an increase in the long-term interest rate in the U.S., which will be an obstacle to the growth of stocks, writes Business Insider.

According to Ackman, inflation and interest rates in the U.S. will remain high for many years. The hedge fund head suggested that the market is overly optimistic that the threat of inflation will dissipate on its own and the rate will fall.

“We don’t believe the Federal Reserve can bring inflation back to a sustainable 2%,” he told investors.

In March, the Fed raised the interest rate from zero to a range of 3.75% to 4% and signaled that the rate would peak above 5% for the first time since 2007.

The reason for this pessimism is that U.S. companies hit by supply chain disruptions during the pandemic will pass on increased labor, rent and raw material costs to customers by raising prices, pushing up inflation.

While Eckman said nothing about the likelihood of a U.S. recession, several of his colleagues emphasized the risk.

But Ackman noted the hedging effectiveness of his Pershing fund, which has generated $5.2 billion in returns since the start of 2020.