(Reuters) – The Federal Reserve’s cautious stance on raising interest rates could backfire by creating uncertainty in the economy and hurt the U.S. central bank’s credibility, Jeffrey Gundlach, chief executive of DoubleLine Capital, said on Thursday.
“This U-Turn – on nothing fundamentally changing – is unprecedented,” Gundlach said in a telephone interview. “Three months ago, we were on ‘autopilot’ with the balance sheet – and now the bond market is priced for a rate cut this year. The reversal in their stance is stunning.”
The Fed on Wednesday scaled back its projected interest-rate increases this year to zero from two in its December forecasts, and said it would end the drawdown of its bond holdings in September after holding rates steady.