Economic guru Bill Gross warned savvy investors that the Federal Reserve just might spark another recession if the central bank is allowed to carry out its long-term strategy.
Gross explained to CNBC that whether or not the Fed leads the U.S. economy into recession depends on whether it sticks to its fed funds forecast.
“If they followed their plan … which basically projects over the next two years for fed funds to reach 2.8 [percent] or even 3 percent, a 170 basis point increase, then yes a recession is possible,” the Janus Henderson Investors portfolio manager told CNBC.
To be sure, the Fed reduced its long-run target for the fed funds rate to 2.8 percent.
Gross warned the Fed should be “careful” because it is a highly-levered economy.
Gross warned about the potential danger of looming interest rate increases in his July newsletter, noting that raising interest rates will increase