Gundlach says negative interest rates are a 'horror'
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[April 23, 2016]
VIENNA (Reuters) - Europe and
Japan's central bank policies of negative interest rates are a "horror"
and will run counter to the desired effect, Jeffrey Gundlach, the widely
followed investor who runs DoubleLine Capital, said in an interview with
a Swiss newspaper.
Gundlach, who oversees $95 billion for Los Angeles-based DoubleLine,
said negative rates would not help fight deflation but withdraw
liquidity from the market because people would rather hoard cash
than invest or deposit it in a bank account.
Negative interest rates "are the stupidest idea I have ever
experienced," the newspaper Finanz und Wirtschaft quoted Gundlach as
saying on its website on Saturday.
"The next major event (for financial markets) will be the moment
when central banks in Japan and in Europe give up and cancel the
Last year, Gundlach predicted that oil prices would plunge, junk
bonds would live up to their name and China's slowing economy would
pressure emerging markets. In 2014, he correctly forecast that U.S.
Treasury yields would fall, not rise as many others had expected.
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Earlier this month, he said the Federal Reserve's rate hike cycle
looked "increasingly likely" to be a one-and-done scenario this
(Reporting by Kirsti Knolle; Editing by Hugh Lawson)
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