Bloomberg News reports that the Fed’s decision to hold rates at the target range of 5.25% to 5.50% is one of the central bank’s best decisions in a while. Jeffrey Gundlach of DoubleLine Capital revealed the same while speaking to CNBC. He made the statement as a post statement following the Federal Open Market Committee’s meeting.
Views on US economy
In the interview, he further said that the move is all right that Fed Chair Jerome Powell has taken. Since the US economy is currently facing cross currents, it is leading to an increase in the debt attributed to the escalating prices.
Gundlach also said that the Fed’s data cannot be relied upon. This is because events like the restart of federal student loans and inflation, coupled with auto-worker strikes, have led to unreliable data.
Due to the ongoing factors, it does make sense for the Federal Reserve to make the wise decision. Not only that, Gundlach also appreciated the fact that the Fed has adopted a wait-and-see approach.
Are rising oil prices an additional problem?
According to Gundlach, the escalating oil price increases the possibility of an additional rate hike since this will nudge higher CPI or consumer price index readings.
However, he also said that this might need to be revised. The base effects and the roll-off of the consumer price index will lead to inflation returning. Moreover, it will continue to remain where it is now but in a sticky way.
The employment rate may cross over the coming three-year moving average during the first quarter of 2024. Accompanied by other headwinds, it also include the risk of a shutdown by the government. The economy will likely slow down in the coming four to six months. This would place the bonds as an ideal investment. He also said that Treasury bonds are appealing, not for the long term but necessarily for the short time.
