The Federal Reserve will have to cut interest rates in the second half of this year, partly to correct a housing market that’s overvalued by as much as 20%, bond guru Bill Gross told CNBC’s Joe Kernen on “Squawk Box.”
“They don’t want to recreate a situation such as they have witnessed in Japan where property declined and you saw an asset bubble popping and producing deflation,” said Gross, chief investment officer and founder of Pimco. “So if we get down to a point where [home] prices are moving in the 5% to 10% negative category, the Fed is going to start to react.”