Bill Gross, founder and CIO, PIMCO
The top bond-fund manager warns of a "highly restrictive" credit environment, whose impact on the U.S. economy may be "8.0 on the Richter scale."
He points to the static U.S. household survey of employment and July auto sales figures as "indicative of prior periods preceding recessions."
"The Fed needs to recognize that at 5.25% (federal funds rate), it's a restrictive rate, relative to a 4% to 5% nominal GDP world. ...Ultimately, they are going to have to cut," Gross said.
CNBC's Econ-Recon survey,
After the Fed's decision was announced Tuesday, CNBC did a snap poll of economists to get their take. While many supported keeping rates on hold, some were clearly disappointed.
Kurt Karl, Swiss Re: "Given the lack of liquidity in some markets and credit problems at large banks, I expected the Fed's statement to be more reassuring and drop the 'inflation concern.' Leaving the statement unchanged has increased the risk of recession."
Robert Froehlich, DWS Scudder: "The Fed is out of touch with reality and should be cutting rates right now!!!"
Click Here to Read Entire Survey Results