An image of Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 5, 2019.
Image Source: Adam Jeffery
DoubleLine Capital CEO Jeffrey Gundlach believes that the Federal Reserve is overlooking the bigger picture once again.
Gundlach stated during an investor webcast that the Fed is being reactive to short-term data rather than adopting a strategic approach, comparing them to Mr. Magoo.
Recent consumer price index (CPI) numbers indicate that inflation is still below the Fed’s 2% target, despite some favorable readings compared to expectations.
Gundlach highlighted the Fed’s zig-zagging response to changes in CPI, noting that the market sentiment has shifted from expecting aggressive rate cuts to just one cut in 2025.
The Fed has already reduced benchmark rates by a full percentage point since September, but the market seems to be signaling a more subdued outlook on future rate cuts.
In conclusion, Gundlach stated that the Fed’s current monetary policy aligns with market expectations, implying a cautious approach to further rate adjustments.
Futures pricing indicates a high likelihood of the Fed maintaining rates at the upcoming meeting, with a possibility of two quarter-point rate cuts throughout the year.