DoubleLine Capital’s Jeffrey Gundlach said on CNBC that he expects next week’s Federal Reserve meeting to mark the last rate hike for the year, adding that anything higher than a 25 basis-point rise could damage the central bank’s credibility.
(Bloomberg) — DoubleLine Capital’s Jeffrey Gundlach said on CNBC that he expects next week’s Federal Reserve meeting to mark the last rate hike for the year, adding that anything higher than a 25 basis-point rise could damage the central bank’s credibility.
“I just think to save, kind of, the program and their credibility, they’ll probably raise rates 25 basis points,” Gundlach said. “I would think that that would be the last increase.”
The DoubleLine Capital founder also said he’s unsure if the upcoming inflation numbers are as “relevant” to the Fed’s rate decision in the context of the turmoil triggered by the collapse of SVB Financial Group.
The SVB fallout is “really throwing a wrench in Jay Powell’s game plan,” he said.
But Gundlach also acknowledged the possibility that the Fed may not raise rates, adding that it was a “kind of a coin flip right now” in terms of what the market was pricing in.
Gundlach also warned of an imminent recession, citing the dramatic steepening of the Treasury yield curve that typically precedes an economic downturn.
“In all the past recessions going back for decades, the yield curve starts de-inverting a few months before the recession comes in,” Gundlach said.
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