Gundlach Advocates for 0.5% Fed Rate Hike, Underestimates Inflation Risks

Jeffrey Gundlach, CEO of DoubleLine Capital, argued that the Federal Reserve's 0.25 percentage point interest rate hike is insufficient to combat inflation, stating that a 0.5 percentage point increase is necessary. He noted that U.S. Treasury yields have risen as the Fed's rate hikes and the possibility of further tightening have come to the forefront. In a CNBC interview on the 16th, he pointed out that the risks of inflation in the U.S. are not being taken seriously enough. Gundlach asserted that the Fed should adopt a 'stun and done' strategy, suggesting that they should monitor economic indicators after a single significant rate hike. On that day, the Fed raised the benchmark interest rate by 0.25 percentage points, setting the target range at 3.75% to 4.00%. All 12 FOMC members unanimously supported the hike. Gundlach criticized the lack of clarity in Chairman Kevin Warsh's press conference and expressed negative views on the idea of forming a task force with external personnel. Following the Fed's rate hike, the yield on the 10-year U.S. Treasury bond rose to 5.025%, while the 2-year yield increased to 3.868%. In contrast, the 30-year yield remained unchanged. This rate hike is expected to spark ongoing debates in the market regarding the pace of further increases.

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