American businessman and DoubleLine Capital founder Jeffrey Gundlach sees the Fed going up 25 basis points next week.
According to him, this will be the last rise and it is believed that the central bank will turn to other anti-inflation measures.
The end of the Fed’s rate hike policy?
In a recent CNBC interview, Gundlach, better known as “The Bond King,” predicted that the Fed would edge higher on March 22 amid the ongoing US banking crisis.
“I just don’t think the Fed will go to 50 at this point. To save the credibility of the central bank, they might go up 25 basis points. I think that will be the last time they go up.”
Jeffrey Gundlach, via CNBC
The collapse of major U.S. banks, including Silicon Valley Bank and Signature Bank, has spooked local investors and consumers, who are starting to wonder how the Federal Reserve will respond to the disaster. Gundlach believes the agency will stop rising (sooner than some predict) and focus on other tools to fight inflation.
“It’s really throwing in a wrench [Fed Chair] Jay Powell’s game plan,” he added.
Most traders think the Fed will announce a 0.25% increase, while fewer than 15% think there will be no change, according to CME Group estimates.
Others, including Anthony Scaramucci, founder of SkyBridge Capital, had previously argued that the central bank would stop raising inflation once U.S. inflation fell to 4-5%. The latest CPI data showed a 6% year-over-year increase, in line with previous expectations and fueling a small bull run in the cryptocurrency market. Bitcoin surged to nearly $26,500 yesterday (CoinGecko data), the highest level since last June.
Gundlach’s pessimistic view on Bitcoin
The American shared his stance last summer, saying that conditions in the cryptocurrency market did not appear to be “positive.” He expects the negative trend to intensify and eventually trigger BTC’s drop to $10,000:
“It looks like it’s being liquidated, so I’m not bullish on bitcoin at $20,000 or $21,000, and I wouldn’t be surprised if it hit $10,000.”
Despite its underwhelming price performance in the ensuing months (compared to 2021 valuations), the major cryptocurrency never lived up to expectations, falling as low as $15,700 during the FTX crisis in November point.
It has moved north as the new year begins and is currently about 50 per cent higher than the number registered on New Year’s Eve.
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