Pimco warns investors: don't underestimate the possibility of Fed mistakes

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Sina US stock news Beijing time on the 14th Bloomberg reported that Pimco global economic adviser Joachim Fels said that the Fed's monetary tightening pace in the next two years may be faster than market expectations, in part because key member changes will affect policy decisions. He pointed out that the market is too focused on the positive policy implications that Donald Trump may bring, while ignoring many risks.

Just as Fels and other investors questioned the US economic outlook, the Fed is also struggling to cope with the new government policy is unclear, and may fill some of the vacant positions of the central bank. BlackRock CEO Larry Fink and Goldman Sachs economists have published critical remarks that the policy of promoting growth may be difficult to achieve. Traders are awaiting testimony by Yellen in Congress this week, and data fabrics show an increase in US inflation.

"In fact, the Fed may turn to the hawks and close the monetary policy too much," Fels said at a conference in Sydney on Tuesday. "Remember, the current Fed’s monetary policy is not excessive expansion. So if you think that if the Fed is more hawkish and the interest rate hike is more than the current market expects, then the fact is likely to be the Fed’s tightening policy. Time is relatively early."

Federal Reserve Governor Daniel Tarullo will step down in early April, and with the existing two directors vacant, the White House will be able to fill three of the seven Fed seats.

Fels said Pimco, which manages $1.47 trillion in assets, has reduced the risk in some of its portfolios and believes it is reasonable to guard against inflation risks.

Editor in charge: Li Wei SF053