Bond expert Bill Gross spoke to CNBC about the federal funds rate and a host of other issues on Friday. Writing for the financial news network, JeeYeon Park reported:

Bill Gross, founder and chief investment officer of Pimco, does not believe the U.S. Federal Reserve will raise interest rates, he told CNBC on Friday.

“I don’t think so,” he said when asked if he foresees a rate hike. “The concerns about inflation have got to be coming down… with oil prices down maybe 25 percent from the peak. Other commodity prices — gold down 20 percent, silver down 10 percent today alone… Those at the helm, so to speak, have to be observant of what’s happening in the commodities sector, and that’s been the biggest push in terms of inflation for the past six to 12 months.”

Though he sees uncertainty in the bond sector, Gross remain optimistic about the rest of the quarter.

“I think the third quarter will be fine based on some technical adjustments with inventory and continued strong trade. But the fourth quarter and the first quarter of 2009 do not look good—it is all dependent upon housing prices.”

According to CNBC’s Park, the founder and chief investment officer of PIMCO is uncertain as to when the U.S. housing market will reach a bottom. However, Gross went into detail about what he expected for the fourth quarter and beyond. Park wrote:

Gross said he believes that 2009 will call for “dramatic actions” from the government in terms of fiscal spending and in terms of new programs to provide liquidity for financial markets.

Gross expects “a deficit near $500 billion to move into the $600 to 700 million category in 2009 as the U.S. sees new programs such as healthcare move onto the agenda.”

Source:

“Pimco’s Gross: Fed Will Not Raise Interest Rates”
JeeYeon Park
CNBC, August 19, 2008

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