Jeff Gundlach says the Fed should have hiked rates by more to fight rising inflation — SkimNews
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- Jeff Gundlach, founder of DoubleLine, said the Fed should have hiked rates by more than a quarter point Wednesday, suggesting a half-point move and quipping he would have called it "stun and done"
- Gundlach argued a 50-basis-point hike would have provided the market with a "truing up" to the Fed funds rate, given the 2-year Treasury yield sat more than 100 basis points above the funds rate
- Gundlach said the 2-year Treasury "leads" the Fed, claiming that hypothesis was proven correct on Wednesday
- Gundlach warned the inflation problem facing the U.S. may not be "fully respected" and reiterated his long-standing view that the Fed should have moved more aggressively
- Gundlach called Fed Chairman Kevin Warsh's post-decision press conference "pretty thin" and "opaque," saying he was not surprised stocks sold off during it
- The Dow Jones Industrial Average fell roughly 700 points in late-afternoon trading, with losses accelerating during and after Warsh's press conference
- Gundlach rejected Warsh's push to bring in task forces to evaluate Fed operations, comparing it to "a company that's having trouble that wants to hire consultants"
Why it matters: Gundlach — one of the bond market's most-watched voices — publicly challenged the Fed's tightening pace within hours of the decision, and his specific complaint hinges on a measurable gap: the 2-year Treasury sat more than 100 basis points above the Fed funds rate, implying the bond market was already demanding more. By singling out Warsh's 'opaque' communication and consultant-style task forces, Gundlach is also signaling skepticism about how the new Fed leadership will guide policy forward.
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