DoubleLine CEO Forecasts a Lone Rate Cut by the Fed in 2024

In a recent interview, Jeffrey Gundlach, the CEO of DoubleLine Capital, suggested that the Federal Reserve might only reduce interest rates once during 2024, given current inflation trends that don't align with the central bank's goals. With inflation persisting above the Fed's preferred level, Gundlach shared insights hinting at a more conservative approach to rate changes than previously anticipated.

Cautious Outlook on Rate Cuts

Gundlach, in his conversation with CNBC, analyzed the Federal Reserve's latest stance on interest rates. Despite market watchers eyeing potential cuts, the Fed's caution was evident as rates remained steady in their recent review, and comments from Fed Chairman Jerome Powell indicated a painstaking wait for clearer signs of inflation retreating to the 2% benchmark.

Referring to multiple rate reductions contemplated by the Fed in March, Gundlach noted, "It seems unlikely that we're going to get three," thus forecasting a tilt towards only a single rate cut. His observations are backed by robust measures like supercore inflation, which excludes volatile food and energy costs, recording a 4.8% increase, far outpacing targets.

Factors Influencing the Rate Decision

Gundlach pointed out that key inflation indicators are not showing the downward trajectory necessary to warrant more aggressive rate cuts. With oil prices hovering around $80 a barrel, sustained pressure on core CPI figures is likely, affecting the Fed's ability to manage inflation successfully.

The investment expert also alleviated fears of a sudden Fed pivot towards rate hikes, which did not materialize at the latest Fed meeting. This provided some relief in financial markets worried about abrupt policy shifts.

FederalReserve, InterestRates, Inflation