- ORIGINAL NEWS
DoubleLine’s Jeffrey Gundlach sees one rate cut this year as the Fed keeps up inflation fight
- SUMMARY
Jeffrey Gundlach, the CEO of investment firm DoubleLine Capital, has revised his forecast for the Federal Reserve’s interest rate policy.
He now believes the Fed will only implement a single interest rate cut this year.
This is a significant departure from his previous estimate of two to three rate cuts.
Gundlach’s change of heart stems from his analysis of the Fed’s policy announcement on Wednesday.
In the statement, Fed Chair Jerome Powell strongly hinted that there would be no further interest rate increases in the near term.
This has led Gundlach to conclude that the central bank is unlikely to be aggressive in lowering rates either.
The bond market immediately reacted to Powell’s comments by sending Treasury yields lower, reaching the lowest point of the day.
Conversely, stocks jumped to their session highs as investors grew optimistic about the prospect of lower interest rates.
Gundlach’s revised forecast suggests that the Fed may be taking a more cautious approach to managing inflation and economic growth.
By signaling that they are unlikely to raise rates, the Fed is giving markets time to adjust and avoiding any potential shocks to the financial system.
However, the prospect of only a single rate cut may be disappointing for investors who had been hoping for more aggressive easing from the central bank.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“The noted fixed income investor said the most important moment from the Fed’s policy event on Wednesday was when the central bank’s Chair Jerome Powell all but ruled out the possibility of a rate hike.”
“Treasury yields dropped to their session lows and stocks shot to session highs as Powell said the next policy move will not be a rate increase.”
Negative
“DoubleLine Capital CEO Jeffrey Gundlach said Wednesday that he now sees no more than one interest rate cut this year.”