- Bankruptcies Jump, Hitting Highest Level in Four Years
- AIG, Ex-CEO Greenberg Reach Pact to Settle Disputes
- Bank of America CEO Search May Extend Into 2010
- Steepest Black Friday Discounts, Revealed
- 'Cancer of Fraud' Permeates Health Care System: Critics
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Judge Erases Couple's $525,000 Mortgage Payment
- Where Do Pardoned Turkeys Go?
- For Many in US, It Will Be a Scaled-Down Holiday Season
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- The Executive Job Search
- S&P Stocks Trading at New 52-Week Highs
- Where Do Pardoned Turkeys Go?
- Judge Erases Couple's $525,000 Mortgage Payment
- Activision Prepares to Double Dip on ‘Modern Warfare 2’
- Salvation Army's Kettles Now Credit Card-Ready
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Topless Business Is Taking Off
- 'Cancer of Fraud' Permeates US Health Care System
Text Size 
The Federal Reserve will cut interest rates again but probably not at the October policy-making meeting, said Bill Gross, manager of the world's biggest bond fund on Tuesday.
The Fed's target rate for federal funds is on a downward track because of slower economic growth, said Gross, the chief investment officer of Pacific Investment Management or PIMCO, speaking on CNBC television.
"The Fed needs to cut interest rates probably as low as 3.75 (percent) before we are all done," he said.
"(Interest rates) need to be based upon where housing is going, based upon where retail sales are going and where the consumer is," said Gross.
Depending on the U.S. economy's rate of growth, Fed policy-makers could cut interest rates by 100 basis points over the next six to nine months, he said.
The Fed last month cut the benchmark federal funds target rate by 50 basis points to 4.75 percent to buffer the economy from a housing slump and financial markets turbulence.
It was the first monetary policy easing in four years and the extent of the cut surprised many market participants. The next policy-setting meeting will take place on Oct. 30-31.
The Federal Reserve is concerned about the real economy but also needs to provide some stability to financial markets, Gross said.
He said a plan by major banks to set up a bailout fund reflects continuing need for liquidity in the financial community, particularly by Citigroup [C
Loading...
()
].
Bank of America [BAC
Loading...
()
], Citigroup and JPMorgan Chase [JPM
Loading...
()
] on Monday said they plan a fund aimed at preventing the dumping of billion of dollars of bonds linked to subprime mortgages and other debt.
Gross added that the rate of 3-month LIBOR (London Interbank Offered Rate) should be 35 basis points lower than its current rate of 5.21 percent.
A high level of the three-month LIBOR indicates that banks are concerned about other banks' ability to repay loans, he said.
Gross also said that equities were reasonably valued relative to the level of interest rates.
He also said what while the Federal Reserve is focused on core inflation, which strips out volatile food and oil prices, former board chairman Alan Greenspan has said that oil prices should be considered in decision-making.
Print
Email
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
- Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
- How can you get out of debt and back on the road to recovery? Follow these ten steps.
Data is a real-time snapshot *Data is delayed at least 15 minutes