The world's central banks are "printing money like gangbusters," which could revive the threat of inflation, Pimco founder Bill Gross told CNBC Wednesday.
By putting "hundreds of billions" in currency in circulation, the central banks "can produce reflation—that's why we’re seeing the pop in oil, gold" and other commodities, he said in a live interview.
At the same time, "there’s the potential for deflationif the private credit markets can’t produce some sort of confidence and solvency going forward," Gross said. "So we’re at great risk here, not only in the U.S. but on a global basis."
Gross has previously predicted a "paranormal" market in 2012 characterized by "credit and zero-bound interest rate risk" and fewer incentives for lenders to extend credit.
He said stock and bond investors must lower their expectations when it comes to returns, with 2 percent to 5 percent as good as they get this year.
He also told CNBC he expects the Federal Reserve will keep interest rates "exactly where it is at 25 basis points for the next three to four years."
Gross's Total Return Fund, the world's largest bond fund, had over $10 billion in outflows in 2011, but Gross stressed the fund "started 2011 at $240 billion and ended it at $244 billion."
He said he will run the Pimco Total Return Fund ETF , which starts March 1, the same way he runs the bond Total Return Fund, adding, "They're twins."
—Reuters contributed to this report.