Gross Expects Fed to Raise Rates in June

Bill Gross says the Federal Reserve will raise interest rates in June. David Rosenberg says it may not happen until next year.  Gross, the investor who moved to Janus Capital Group Inc. in September from Pacific Investment Management, said Fed interest rates close to zero are threatening to create market bubbles as investors seeking higher returns send stocks and bonds surging.

“The Fed is willing at this point to at least acknowledge that by raising interest rates 25 basis points in June,” he said Monday on Bloomberg Television’s “Street Smart” program.  Rosenberg, the chief economist at Gluskin Sheff & Associates, said Fed Chair Janet Yellen will wait until inflation reaches its 2 percent target, and that may not happen until next year. “She will be patient,” he said on the same program.

Analysts differ on when the Fed will implement its first rate increase since 2006 as inflation slows even as jobs growth picks up. Traders see a 17 percent chance the central bank will raise its main rate from a range of zero to 0.25 percent by its June meeting, according to Fed funds futures data compiled by Bloomberg. The odds have fallen from 44 percent six months ago.

Bloomberg