Bill Gross: Bernanke Has Left the Building

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Sept. 19 (Bloomberg) -- Pimco's Bill Gross comments on yesterday's decision by the Federal Reserve not to taper QE and the outlook for a Fed chaired by Janet Yellen. He speaks with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Yesterday's decision, in my opinion, was an increasingly dovish handoff from the chairman to janet yellen.

Bernanke has, metaphorically, left the building.

What did the market interpret that to mean?

It interpret -- interpreted, because he yellen is, if anything, to the left of bernanke in terms of policy, yesterday's decision was significantly influenced by that fact.

Is that where we need to be, in your opinion.

Do we need -- is that where we need to be, in your opinion?

Do we need to be so concerned that we cannot even handle a $10 billion taper?

It suggested the data did not justify the taper.

There are some elements of truth to that.

I think as well that the fed reserve certainly, if yellen was appointed as the chairperson, will become increasingly focused on inflation.

Inflation at 1.2%, which is the pce, which is their target , is almost one percent or more below where they wanted to be.

If that is the case, if yellen focuses not just on unemployment, but on inflation, and her prior speeches have given us that indication, then this increasing emphasis on getting the inflation rate higher -- it is supportive of very low yields on the front end and perhaps increasingly favored funding for chips, inflation protected securities.

Do you believe that they are talking to janet yellen, the expectation being that she will get the job, and that they want to put in place the policies she will want?

I wish i had been a fly on the wall.

I would say, yes, that is the case.

If i were part of that committee and i knew that the odds on favorite for chairperson was jenny yellen, i would -- the odds-on favorite for chairperson was janet yellen, i would sit back and listen.

I would give her the lead.

I think this meeting was dominated by janet yellen, by easy money, buy low policy rates, and by increasing focus on inflation going forward, which is far too low.

This text has been automatically generated. It may not be 100% accurate.


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