arabianmoney.net / February 24, 2013
Pimco boss Bill Gross, whose credit supernova remarks caused a storm (click here) told Bloomberg Television’s Trish Regan and Adam Johnson that quantitative easing will continue to ‘at least the end of the year.’
Mr. Gross said that the Federal Reserve knows that its policy has negatives: ‘There are ultimately and presently negatives to these policies. The chairman recognizes that.’ He also spoke about returning to the gold standard, which would be ‘very difficult’ but something to look at ‘for a future date.’
Gross on whether this is the end of quantitative easing as we know it:
‘Not yet. As my tweet indicated, I think it’s growth dependent and what type of growth would be necessary to and quantitative easing? Probably something like 3 to 3.5 per cent for a number of quarters and probably something approaching 7 per cent, given the 6.5 per cent unemployment rate.
‘We don’t think we are there yet. Obviously yesterday the minutes raised the possibility. There is dissension amongst the participants, the governors, so to speak, but the three primary musketeers, the three musketeers, we call them — Bernanke, Yellen and Dudley — are in firm command and we don’t think anything is going to happen for at least 10 months.’
On whether 3.5 per cent growth will happen in the near future:
‘It would feel like it is coming if we did not have fiscal austerity and the pullback in terms of government spending or the potential pullback. Housing and other house related industries are pulling the economy forward, but only probably only at a 2 per cent pace.
‘The Fed has indicated–not for the purposes of quantitative easing specifically–but in terms of their policy rate, raising that 25 basis point policy rate, that they would need at least 6.5 per cent unemployment and perhaps 2.5 per cent or higher inflation for one to two years.
‘We’re close to those so quantitative easing, in terms of a trillion dollar package, $85 billion monthly package of treasuries and mortgages, we think it continues until at least the end of the year.’