Billionaire investor and founder of Hedged Fund Gewater Associates, Ray Dalio, thinks it is not yet time for the Federal Reserve to alleviate American monetary policy.
In a new Bloomberg interview, Dalio says that the Fed “should not lower the interest rates” despite the pressure to do this.
Dalio says that the Fed in the longer term, when the current Governor Jay Powell ends in May 2026, can lower the rates due to political pressure.
“There is a lot of uncertainty and there is a deterioration of sentiment, but really the actual economy. So they (the FED) are in a difficult position.
I think if we look further, we are dealing with the political aspects … I think that if there is a new FED chair, there will probably be more tendency to lower the rates because it is an old story of conflict between those who are in political, in political [power]who love stimulation. And because of the enormous impact of interest rates on the debt service, because the debts are so large, there will be busy in this way. “
According to Dalio, the aggressive relaxation of American monetary policy can negatively influence the bond market.
“I think the markets, if they would see a too aggressive reduction in monetary policy, too inappropriate reduction, that it would actually be bad for the bond market …
… View the yield curve. As you get the rates with long rates and you also have at the same time, let’s say, movement in the dollar and rises in gold, that kind of dynamic reflects a movement from the tires. Because the value of money matters a lot. “
https://www.youtube.com/watch?v=YPF2-BU5BHO
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