With the economy still on life support and inflation an increasing threat, the Federal Reserve will continue to act like a “sugar daddy” and leave interest rates untouched until 2011, predicts PIMCO Co-Chief Investment Officer and founder Bill Gross.
“The output gap and the core inflation rate is probably heading downward for the next 12 to 24 months,” Gross said. “If that’s the case, and if unemployment stays close to 10%, then there’s no reason for the Fed to begin to raise interest rates.”
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