By Bill Gross, famously known as the “Bond King,” has raised concerns about the Federal Reserve’s handling of interest rates and inflation in recent years. In an interview with Bloomberg Television, Gross expressed his lack of confidence in the U.S. economy and those responsible for guiding it.
Gross pointed out that the Fed has struggled to find the ideal fed-funds rate that neither fuels inflation nor triggers deflation. He questioned whether the central bank has the wisdom to determine the appropriate rate at any given time or even in the months ahead. He urged caution in relying too heavily on their judgment.
These remarks from Gross were made during the Federal Reserve’s blackout period leading up to its upcoming meeting in Washington. Traders are anticipating multiple quarter-point rate cuts in the coming year, while also considering the possibility of a slower pace of “quantitative tightening” – the process of reducing the Fed’s $7.67 trillion balance sheet.
“I would advocate against quantitative tightening. It is currently an ill-advised philosophy and policy,” Gross emphasized. Furthermore, he suggested that the Fed should consider lowering interest rates over the next six to 12 months, given their current range of 5.25%-5.5%.
On Monday, both 2-year and 10-year Treasury yields experienced a minor retreat from their year-to-date highs. Meanwhile, U.S. stocks gained momentum, with the Dow Jones Industrial Average surpassing the historic milestone of 38,000, according to preliminary data.
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