Tags: DoubleLine | Gundlach | Federal Reserve | Rate Increase

DoubleLine's Gundlach Expects Fed Won't Raise Rates in 2015

By    |   Wednesday, 03 June 2015 01:11 PM

Jeffrey Gundlach, chief executive of investment firm DoubleLine Capital, doesn’t expect the Federal Reserve to raise interest rates this year.

"If the Fed doesn't raise rates, that's bad for the long bond because the bond wants it to tighten. And it's positive for stocks because stocks love their friend, zero interest rate policy," he told CNBC.

Gundlach said stocks will cheer easy monetary policy if it continues.

Many economists expect the Federal Reserve to soon start raising interest rates for the first time since 2006.

But the Fed has said it will raise rates only once it sees further improvement in the labor market, and is reasonably confident that inflation is headed back to the Fed's 2-percent target. However, with growth in the first-half of the year likely to run below the economy's potential of about 2 percent growth, the timing of a rate hike is unclear.

Policymakers have kept interest rates near zero since December 2008, and most have long thought they would be able to begin to lift rates this year. Even after the economy's dismal first-quarter performance, policymakers stuck to that view, attributing the slowdown to the effects of a severe winter, and predicting a snapback.

Gundlach isn't the only notable expert who doesn't expect the central bank to hike rates this year.

CNBC commentator Ron Insana wasn't too impressed with the Federal Reserve's recent policy statement, in which it removed forward guidance, leaving it unclear when it will raise interest rates.

"The Fed has muddied — significantly — the outlook for monetary policy," he wrote in a commentary for CNBC. "This is as unclear as I have seen Fed policy in quite some time, and it is not helpful."

Many economists expect the central bank to begin increasing rates in September. "My guess is that a rate hike is not in the cards in June, and maybe even in 2015 altogether," Insana noted.

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Jeffrey Gundlach, chief executive of investment firm DoubleLine Capital, doesn't expect the Federal Reserve to raise interest rates this year.
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2015-11-03
Wednesday, 03 June 2015 01:11 PM
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