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.