March 18, 2015 / 3:23 PM / in 3 years

DoubleLine's Gundlach says Fed may change 'patient' to 'flexible'

Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, speaks at the Sohn Investment Conference in New York, May 5, 2014. REUTERS/Eduardo Munoz

NEW YORK (Reuters) - The Federal Reserve on Wednesday will likely discard a pledge to remain “patient” before hiking rates, replacing it with the word “flexible,” said widely followed investor Jeffrey Gundlach, co-founder of DoubleLine Capital.

“Patience out,” Gundlach told Reuters in an email ahead of the Federal Reserve’s policy statement to be released at 2 p.m. EDT on Wednesday. “Flexible is the new ‘patient’. That word may well replace ‘patient’ in the statement.”

Market participants are anticipating the Fed will likely drop the word “patient” from its statement with respect to raising interest rates, which could pave the way for a rate increase in June or September this year.

While the turn in language would open the door to an initial rate hike as early as June, the uncertain path of the global economy remains a dilemma for central bank officials who say they want more confidence in the U.S. recovery and the eventual rise of inflation before committing to a rate “lift-off.”

A near majority of Fed officials publicly have endorsed the idea of removing the patience pledge, putting investors and the public on notice that an interest rate hike could occur at any point from June onward.

Reporting By Jennifer Ablan; Editing by David Gregorio

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