During an appearance on CNBC's 'Closing Bell,' Jeff Gundlach expressed his belief that the Federal Reserve should have implemented a larger rate hike than the quarter-point increase announced. He argued that a half-point hike would have better aligned the Fed funds rate with the prevailing 2-year Treasury rate, which was over 100 basis points higher.
Gundlach noted that the yield on the 2-year U.S. Treasury rose approximately 7 basis points following the Fed's decision, indicating market expectations for interest rates. He voiced concerns that the current inflation situation may not be adequately addressed by the Fed's approach, suggesting that a more aggressive rate hike could have provided clarity.
Additionally, he commented on the negative market reaction during Fed Chairman Kevin Warsh's press conference, where the Dow Jones Industrial Average dropped 700 points.
Gundlach criticized Warsh's communication style as lacking substance and expressed disapproval of the Fed's plan to hire consultants to evaluate its operations, likening it to a struggling company seeking external advice that may not address its core issues