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DoubleLine Capital CEO Jeffrey Gundlach said Wednesday he expects the Federal Reserve to stay on hold for the remainder of Jerome Powell’s term as chair with a more balanced outlook for the economy.
“I think I would bet pretty heavily that there’s not another rate cut under Jay Powell,” Gundlach said on CNBC’s “Closing Bell.” “I think he’s going out of his way to emphasize that inflation is a little elevated, but not as bad as maybe it was feared a few months ago, that the unemployment rate is no longer separately rising in any kind of meaningful way.”
Powell has just two policy meetings left as chair — in March and April — before his term expires. A new chair would take the helm for the June meeting, assuming Senate confirmation.
On Wednesday, the central bank kept its overnight lending rate steady at a range of 3.5% to 3.75%. The post-meeting statement suggested that economic activity has been “expanding at a solid pace,” while policymakers also noted that the unemployment rate has shown some signs of stabilization.
“I think, and many of my colleagues think, it’s hard to look at the incoming data and say the policy is significantly restrictive at this time,” said Powell during his press conference.
Fed funds futures trading suggests two quarter percentage point cuts by the end of 2026, according to the CME FedWatch Tool.
“He’s talking about less tension between both sides of the mandate, and I really agree with that,” Gundlach said, referring to the Fed’s dual goals of price stability and maximum employment. “And I think he’s setting the stage.”
Gundlach reiterated his preference for international exposure, saying investors should consider allocating 30% to 40% of their portfolios to unhedged international equities. He said such positions could benefit from gains in local currencies against the U.S. dollar.
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