Fed to Keep Rates Low for a 'Long, Long Time': Gross

The Federal Reserve is unlikely to change monetary policy for years as the economy remains mired in an extended period of slow growth, Pimco's Bill Gross told CNBC.

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Bill Gross of PIMCO participates in a conference on the future of housing finance at the Treasury Department in Washington, DC.

As Fed Chairman Ben Bernanke prepares his much-awaited Humphrey Hawkins speech, the co-CEO of the world's largest bond manager said he sees no end in sight to the central bank's policy of sub-zero real interest rates.

"What Bernanke should explain in terms of his language is it's really going to be a long, long time from which the Fed deserts its 25 basis points Fed funds target," Gross said. "That means perhaps several years as opposed to several quarters or several months."

Pimco's Total Return is the world's largest bond fund and has been the focus of investor attention as it exited its position in almost US government holdings.

But the firm recently changed course and added some positions in Treasurys—still in shorter-duration notes but nonetheless a wading back in American debt that came as a surprise.

But Gross denied that the firm was capitulating in its position, but rather adding some US debt as an "insurance policy" amid turmoil in the global debt markets. Pimco's only holding had been in short-term bills that are yielding virtually zero as the Fed keeps its rate target at 0.25 percent or below.

"Rather than get nothing, we prefer to move into the two- to three-year space and get 37 basis points (0.37 percent) or 65 basis points, get something for clients," he said. "But it's not an endorsement of Treasurys. For months now they have been more of an insurance policy than an investment."