DoubleLine Capital CEO Jeffrey Gundlach stated on Wednesday that he expects the Federal Reserve to maintain current interest rates for the remainder of Jerome Powell's term as Chairman, while adopting a more balanced outlook on the economy.
"I am virtually certain there will be no more rate cuts under Powell's leadership," Gundlach remarked in an interview. "I believe he is strongly emphasizing that while inflation is slightly elevated, it is not as severe as feared just months ago, and the unemployment rate is no longer showing any significant isolated increases."
Powell's term concludes this May, leaving him with only two remaining policy meetings to chair as Fed Chair, scheduled for March and April. If confirmed by the Senate, the Fed's June meeting will be presided over by a new Chair.
On Wednesday, the Federal Reserve maintained the overnight lending rate within the range of 3.5% to 3.75%. The post-meeting statement noted that economic activity is expanding at a "solid pace," while policymakers also observed signs that the unemployment rate has begun to stabilize.
"Based on the data we have received so far, I, and many of my colleagues, find it difficult to confidently assert that current policy is sufficiently restrictive," Powell commented during his press conference.
According to the CME Group's FedWatch tool, trading in federal funds futures suggests the Fed may implement two 25-basis-point rate cuts by the end of 2026.
"He discussed reducing the conflict between the Fed's dual mandates of price stability and maximum employment, a point with which I strongly agree," Gundlach said. "I believe he is laying the groundwork for that."
Gundlach reiterated his preference for international investments, advising investors to consider allocating 30% to 40% of their portfolios to unhedged international stocks. He suggested that such investments could benefit from potential appreciation of local currencies against the U.S. dollar.
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