Bill Gross Says US Fed Might Not Raise Rates in 2015

The Federal Reserve could find itself challenged to raise U.S. interest rates this year as global growth remains sluggish and inflation subdued, closely watched bond investor Bill Gross said on Monday.

“With the dollar strengthening and oil prices declining, it is hard to see even the Fed raising short rates until late in 2015, if at all,” said Gross, who oversees the Janus Global Unconstrained Bond Fund, in a collection of investment views posted online by Janus Capital Group.

With global economies struggling, Gross said, “it’s going to be very difficult for the Fed as the major central bank for the global reserve currency to raise interest rates to historical levels.”

 
That could keep the Fed’s major interest rate capped at around 1 to 2 percent, Gross said, keeping yields on the benchmark 10-year U.S. Treasury note not far from its “seemingly ridiculous” current yields.

That note last traded at a yield of 2.0476 percent on Monday morning.

“Interest rates in almost all developed countries will remain near the zero bound, as well,” Gross added.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza