Jeffrey Gundlach: Federal Reserve is “Missing the Bigger Picture” Again
DoubleLine Capital CEO Jeffrey Gundlach believes the Federal Reserve is once again missing the bigger picture and struggling to balance short-term data with long-term strategy. In a recent investor webcast, Gundlach, who manages $95 billion in assets, criticized the Fed’s recent rate cuts, stating that the central bank is “looking like Mr. Magoo, driving around, bumping into things.”
Gundlach suggests that the Fed is too focused on short-term data, reacting impulsively to changing trends in inflation and economic growth. He believes the central bank should take a more strategic approach, weighing the long-term implications of its decisions. According to Gundlach, the Fed’s recent actions have led to a “zigzagging” approach to inflation, with the market now assuming only one rate cut in 2025.
Gundlach’s comments come as the Consumer Price Index (CPI) rose 0.4% in the month, with a 12-month inflation rate of 2.9%. While the numbers show some positive signs, they still fall short of the Fed’s 2% inflation target. The revelation has led to a market adjustment, with futures pricing now implying that the Fed will remain on hold at its next meeting, but potentially cutting rates twice in 2025.
Gundlach believes the Fed is in sync with the market, but suggests that signals for a change in monetary policy are slowing down. He urges the central bank to adopt a more thoughtful approach, one that balances short-term data with long-term strategy.
