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Bill Gross reacts to Fed decision to leave rates unchanged

Bill Gross, Janus Global Unconstrained Bond Fund portfolio manager, said Wednesday the Federal Reserve's decision to leave interest rates unchanged demonstrates the U.S. economy is on a steady, albeit slow, path toward normalization.

The bond guru, who was "hardly able to speak" after the Fed decided not to raise rates in September, said on CNBC's "Power Lunch" the question now becomes whether or not the economy can grow faster than 2 percent.

"The fact is that 1 to 2 percent real GDP growth and near 0 percent interest rates, which lowers margins for financial companies, basically doesn't produce much in terms of earnings growth," he said.

Gross said that, in addition to real GDP growth and inflation, the other things that matter are "structural." He said the structural problems such as demographics, high debt levels and leverage may not make headlines, but are still factors that investors should be keeping a close eye on.

"We're stuck in this 0 to 2 percent rut and it's not good for financial assets, which have been overpriced for 5 to 6 years."

Gross also said the aging of the populace and inability to replace them with younger and more productive workers is a critically important aspect of the economy going forward.