Jeff Gundlach Calls for a Larger Fed Rate Hike

Bond-market veteran Jeff Gundlach, founder of DoubleLine, argued that the Federal Reserve should have raised its policy rate by a half-point rather than the quarter-point it delivered in its latest meeting. Gundlach said the smaller move left inflation insufficiently addressed and risked a misalignment between market expectations and the Fed’s stance.

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The Fed’s recent tightening cycle has been characterized by incremental hikes, with many investors anticipating a “one-and-done” approach—one or two modest increases before pausing. Gundlach’s comments came during a CNBC “Closing Bell” interview, where he framed the quarter-point hike as insufficient to “truing up” the Fed funds rate to prevailing market rates.

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• The 2-year U.S. Treasury yield was reported to be more than 100 basis points above the Fed funds rate at the time of Gundlach’s interview.

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• In Wednesday-afternoon trading, the 2-year Treasury yield climbed roughly 7 basis points.

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Gundlach emphasized that a larger increase would have provided a clearer signal to markets and allowed the Fed to assess inflation data after a more decisive move. He warned that the current pace might leave the inflation problem insufficiently addressed, suggesting that a 50-basis-point hike followed by data-driven adjustments would be a more prudent path.

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• “I would have called that stun and done,” — Jeff Gundlach, founder of DoubleLine

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• “I would have just done the 50 and then see what the data does,” — Jeff Gundlach, founder of DoubleLine

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