Jeffrey Gundlach, CEO of DoubleLine Capital, said Wednesday that he expects the Fed to keep policy unchanged for the remainder of Chairman Jerome Powell’s term due to a more balanced outlook for the economy.
“I think I’d make a pretty good bet that there won’t be another rate cut under Jay Powell,” Gundlach said on CNBC’s “Closing Bell.” “I think they’re going out of their way to emphasize that while inflation is up a bit, it’s not as bad as feared a few months ago, and that unemployment is no longer rising in a meaningful way in isolation.”
Until the end of Mr. Powell’s term, he has only two policy meetings remaining as chairman, in March and April. If approved by the Senate, a new chair would take the reins at the June meeting.
The central bank on Wednesday kept overnight lending rates unchanged at a range of 3.5% to 3.75%. A statement after the meeting suggested economic activity was “expanding at a solid pace,” but policymakers also noted that unemployment was showing signs of stabilizing.
“I think, and many of my colleagues do, that it’s difficult to look at the data that’s coming and say that policies are going to be significantly restrictive at this point,” Powell said at a news conference.
Federal funds futures contracts suggest a rate cut of two quarters of a percentage point by the end of 2026, according to the CME FedWatch tool.
“He talks about de-escalation between both sides of the mission, and I very much agree with that,” Gundlach said, referring to the Fed’s twin goals of price stability and maximum employment. “And I think he’s setting the stage.”
Gundlach reiterated his emphasis on international exposure, saying investors should consider allocating 30% to 40% of their portfolios to unhedged international stocks. He said these positions could benefit from local currency appreciation against the US dollar.
