Bond expert and founder of DoubleTree founder Jeffrey Gundlach joined CNBC’s “Closing Bell” Wednesday following the Federal Reserve’s decision to keep interest rates at the 5.25%-5.5% level.
Consumer Price Index inflation should fall, but the U.S. economy may see a recession in the early part of 2024, he said.
Gundlach also said the Federal Reserve left the door “wide open” for potential action in future meetings. He said that he expects the central bank’s dot plot to be less aggressive as long as inflation falls moving forward.
The SPDR S&P 500 Trust ETF (NYSE:SPY) traded higher by more than 1% late into Wednesday’s session following Fed Chair Jerome Powell‘s press conference.
Read Also: Jerome Powell Weighs In, Bond Bulls Return: What You Need to Know About The Fed’s Latest Move
“It’s almost a direct repeat of the last meeting,” Gundlach said. “He said they’re not even talking about cutting interest rates … the door was left pretty much wide open for flexibility in future meetings.”
Gundlach pointed to the fact that Powell said the Federal Reserve would proceed “carefully” as a dovish sign, and that the market liked it. Gundlach said that he believes a bond rally has started, following what he called a brutal sell-off.
Gundlach also told “Closing Bell” host Scott Wapner that he believes the odds of a recession in the U.S. are “pretty high,” but that interest rates should fall if one occurs.
Gundlach predicts that inflation will continue to come down, which should also give the Fed some ability to start thinking about cutting rates.
Photo via Shutterstock.
