Billionaire bond manager Bill Gross, who has long warned that low interest rates punish savers and banks, says the Federal Reserve is likely to be cautious with increases because the current environment leaves little room for error.
“Should a crisis arise because of policy mistakes, geopolitical crises, or other currently unforeseen risks, the ability to protect principal will be impaired relative to history,” Gross wrote in an investment outlook released Thursday. “That in turn argues for a more cautious and easier Fed than otherwise assumed.”
The central bank is expected to raise rates for the third time this year when it meets Dec. 13.
By the end of 2018, the federal funds target rate will nearly double to 2.125 percent, according to the median projection of its open markets committee members. Market futures project a 1.8 percent rate by next December.