Why The Bond King Says The Fed Needs To Stop Raising Interest Rates

Jeffrey Gundlach, the billionaire investor known as the Bond Kind, told CNBC Wednesday the Federal Reserve should stop raising interest rates because the inflation problem has already cooled substantially.

Gundlach echoed a similar message to the one shared by Wharton professor Jeremy Siegel Tuesday. 

What Happened: The Federal Reserve announced on Wednesday it will be raising interest rates by another 50 basis points, which was expected. But the central bank also released a new dot plot that showed expected interest rates surpassing 5% by the end of next year.

This spooked investors, with the SPDR S&P 500 Index SPY trading down sharply following the announcement 

"I think there has been some progress on inflation," Gundlach told CNBC. "Nobody's really talking about all of these runaway price increases anymore. With the economy weakening, I think the inflation rate is going to fall faster than most economists do." 

Related Reading: Fed Still Needs 'Substantially More Evidence' Following 0.5% Rate Hike — Experts React With 'Famous Last Words'

What's Next: Treasury yields slipped on Thursday, a sign that the bond market is recalibrating following the Fed’s announcement Wednesday.

Despite signs that inflation has cooled, Fed Chair Jerome Powell said that he will need "substantially more evidence" that prices are stabilized before the Fed can quit raising interest rates.

Gundlach is the founder and CEO of DoubleLine Capital. 

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