PIMCO Chief Investment Officer: The extent of the Fed's rate cut is not the key

Daniel Ivascyn, chief investment officer at Pacific Investment Management Co. (Pimco), which manages the world's largest actively managed fixed-income fund, said the bond market's expectations for the Fed to cut interest rates are too high. Swap rates in New York on Tuesday afternoon showed that traders expect the Fed to cut interest rates by a total of 115 basis points this year. This means that in the three remaining meetings, starting with Wednesday's decision as early as one will cut interest rates by 50 basis points. And in the next 12 months, the market expects a total rate cut of more than 240 basis points, a pace of rate cuts that is very rare in non-recessionary periods. Ivascyn, who manages the $163 billion Pimco Income Fund, said in an interview: "We think the market may be a little too hasty in its expectations of short-term rate cuts. There is a risk of re-acceleration of inflation in the coming months, which may cause the Fed's actual rate cuts to be lower than the level reflected in market prices." (Jinshi)