DoubleLine's Jeffrey Gundlach Predicts No Further Rate Cuts Under Jerome Powell
DoubleLine Capital CEO Jeffrey Gundlach made a bold prediction on Wednesday, stating that he expects the Federal Reserve to maintain its current stance for the remainder of Jerome Powell's term as chair. Gundlach believes the Fed will adopt a more balanced outlook for the economy, indicating a potential shift in monetary policy.
In an interview on CNBC's 'Closing Bell', Gundlach expressed his confidence in the Fed's decision, saying, 'I would bet pretty heavily that there's not another rate cut under Jay Powell.' He highlighted Powell's emphasis on the current state of inflation and unemployment, suggesting that the economy is not as dire as it was feared a few months ago.
With Powell's term as chair set to end in April, the next chair will take office for the June meeting, pending Senate confirmation. The central bank's decision to keep its overnight lending rate steady at 3.5% to 3.75% aligns with Gundlach's perspective. The post-meeting statement indicated solid economic expansion, and policymakers noted signs of stabilization in the unemployment rate.
During his press conference, Powell himself acknowledged the current policy's effectiveness, stating, 'It's hard to look at the incoming data and say the policy is significantly restrictive at this time.' However, Fed funds futures trading suggests potential rate cuts by the end of 2026, according to the CME FedWatch Tool.
Gundlach agreed with Powell's approach, praising his efforts to balance the Fed's dual mandates of price stability and maximum employment. He also reiterated his investment strategy, recommending that investors allocate 30% to 40% of their portfolios to unhedged international equities, which could benefit from currency gains against the U.S. dollar.
