NEW YORK (Reuters) - Jeffrey Gundlach, chief executive of investment firm DoubleLine Capital, said on Tuesday he still believes the U.S. Federal Reserve will probably not raise interest rates this year, in part because of a lack of wage inflation.
Gundlach, reiterating his Federal Reserve call first made in early May, said on a client webcast that odds of a Fed rate increase in December are less than 50 percent and under 30 percent in September.
The odds of a September interest rate hike “weirdly” have risen, Gundlach said. “I would take the under on that ... I think the odds of raising rates by December is less than 50 percent,” he added.
Gundlach said he has been closely watching the year-on-year change in hourly earnings in non-farm payroll figures. If the year-on-year change exceeds 1.5 percent, Gundlach said he believes the chances for the Fed to raise rates increases.
“If you want to talk about something that is absolutely not going to happen, it is 1.5 percent inflation over all future time windows,” he said.
Last year, Gundlach correctly forecast that U.S. Treasury yields would fall, rather than rise as many expected, because inflationary pressures were nonexistent and technical factors such as aging demographics were at play.
Reporting By Jennifer Ablan; Editing by Chris Reese and Alan Crosby