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Jeffrey Gundlach says Fed's Warsh is not going to be the 'easy money' chairman many hoped for
CNBC • • business
Key Points:
- DoubleLine Capital CEO Jeffrey Gundlach described new Fed Chair Kevin Warsh's stance as more hawkish than expected, emphasizing a strong commitment to restoring price stability and signaling reduced likelihood of easy monetary policy or rate cuts.
- Warsh reiterated the Fed's goal to bring inflation down to 2%, a target not met in five years, stressing a unanimous and unambiguous commitment to this objective, which contrasts with earlier market expectations for a looser policy.
- The Fed's recent policy statement and Warsh's press conference emphasized price stability, with Warsh declining to provide individual interest-rate projections and indicating a review of the Fed's communication strategy.
- Gundlach believes Warsh's firm stance on inflation reduces the risk of overly accommodative policies that could reignite inflation, making long-term U.S. Treasuries a more attractive investment under the new leadership.
- Warsh has effectively tied his credibility to achieving price stability, making aggressive rate cuts less likely and signaling a tougher approach to inflation control compared to previous Fed leadership.
