Ray Dalio, billionaire founder of Bridgewater Associates, thinks the Federal Reserve shouldn’t ease monetary policy just yet. He’s advising against cutting interest rates, despite the pressure to do so.
No Rate Cuts (For Now)
In a recent interview, Dalio explained that while there’s uncertainty and declining sentiment, the actual economy isn’t necessarily demanding a rate cut. He sees the Fed in a tough spot. However, he predicts a potential shift after current Fed Chair Jay Powell’s term ends in 2026. He anticipates future Fed chairs might face political pressure to cut rates due to the impact of interest rates on massive national debt.
Aggressive Easing Could Hurt Bonds
Dalio also warned that aggressively easing monetary policy could harm the bond market. He believes that if the Fed cuts rates too aggressively, it could negatively affect bond values. He suggests watching the yield curve, along with the dollar and gold prices, as indicators of potential shifts out of the bond market. These factors reflect the changing value of money, which is a significant consideration.
