The future of interest rates now rest with Ben Bernanke, said Bill Gross of Newport Beach-based Pacific Investment Management Co. on Tuesday.
The Federal Reserve’s move to up short-term interest rates to 4.5% gives incoming chairman Bernanke more leeway on whether to raise rates at the Fed’s next meeting on March 28.
“What they did today was give Bernanke a relatively clean slate,” Gross said on CNBC.
In December, Gross said he thought the Fed could end its hikes at 4.5%. Others see the benchmark rate going to 4.75%.
Absent from the Fed’s statement on Tuesday was the word “measured,” which the central bank has used to describe its nearly two years of rate hikes.
Instead, the central bank said “some further policy firming may be needed” to check inflation.
That was a slight change from the December meeting, Gross said, when the Fed said “measured policy firming is likely to be needed”
Tuesday’s meeting was the last with Alan Greenspan as chairman. Bernanke was approved by the Senate on Tuesday and is set to become chairman on Wednesday.
Gross said he’d “prefer to be a fly on the wall in the March meeting” with Bernanke presiding.
