Daniel Ivascyn, co-director of the Pimco Income Fund, which runs the world’s largest active bond fund, said it was “dangerous” to think the Fed was finished.
Although the Fed’s failure to give a definite signal for September after the interest rate hike in July led to speculation that the tightening cycle has come to an end, some investors are calling for caution.
Daniel Ivascyn, co-manager of the Pimco Income Fund, said it was “dangerous” to think the Fed was done. Ivascyn, who thinks that the chance of a rate hike in September is half, said that even if September is skipped, the risk of further rate hikes will continue for a while. Stating that inflation is likely to remain above the target, Ivascyn stated that inflation may remain sticky with the possible increase in housing prices.
Financial markets have long expected the Fed to signal an end to monetary policy tightening, and investors previously predicted that the central bank would change course, especially as fears of a banking crisis flared in March.
But on Wednesday, Fed Chairman Jerome Powell bolstered hopes for the end, saying policymakers may not raise rates at their next meeting in September. He said this would depend on the economic reports to be released over the next two months, pointing to a promising slowdown in inflation.