Pimco warns of Fed

Daniel Ivascyn, co-manager of Pimco Income Fund, which manages the world’s largest active bond fund, said it was “dangerous” to think the Fed’s job is done. While the Fed’s failure to give a definitive signal for September after raising interest rates in July has led to speculation that the tightening cycle is nearing its end, some investors are urging caution. Daniel Ivascyn, co-manager of Pimco Income Fund, said it was “dangerous” to think the Fed’s job is done. Ivascyn, who thinks the chance of a September rate hike is 50/50, said there would still be a risk of further rate hikes for some time even if September were skipped. Ivascyn said there was a possibility that inflation would remain above target, and inflation could remain sticky as housing prices rise. Financial markets have long been waiting for the Fed to signal an end to monetary policy tightening, and investors had previously speculated that the central bank would change course, particularly when fears of a banking crisis flared in March. But on Wednesday, Fed Chairman Jerome Powell bolstered hopes for an end by saying policymakers may not raise interest rates at their next meeting in September. He said that would depend on economic reports over the next two months and pointed to a promising slowdown in inflation.