"I think you have to stamp out the disease of inflation," Icahn told FT, ahead of Fed's rate-setting meeting next week in which the U.S. central bank is expected to raise its benchmark by 25 basis points.
The activist investor also warned of stress beyond the financial sector, saying that many companies had wasted billions of dollars on flawed acquisitions and become over indebted in the process, the report said.
This would result in "major problems" for the broader economy, he told FT.
Icahn has been urging Illumina Inc to divest cancer test developer Grail Inc, while the company said it will divest if it loses an appeal to the European Commission where regulators said last year they intended to require the life sciences company to unwind the $7.1 billion takeover.
The fight with the EU could take many years and the only path forward is for Illumina to divest the asset, Icahn added, according to the report.
(Reporting by Maria Ponnezhath in Bengaluru; Editing by Rashmi Aich)