- May 25, 2002
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- Certified Residential Appraiser
Jan. 22 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve's emergency cut in borrowing costs today is a ``sad testament'' to the state of the U.S. economy.
The central bank cut the target overnight lending rate to 3.5 percent from 4.25 percent after stock markets tumbled from Hong Kong to Paris amid increasing signs of a U.S. recession. Policy makers weren't scheduled to gather until next week. Gross expects the rate to fall as low as 2.50 percent.
``It's a sad testament to think the Fed has to cut interest rates eight days in front of a meeting to salvage the equity markets,'' said Gross, the founder and chief investment officer of Pacific Investment Management Co., in a Bloomberg Television interview. ``The U.S. economy is in a rather sad state of affairs in that it depends on housing and stock prices to keep going.''
Today's rate cut is the biggest single reduction since the central bank began using the rate as the principal tool of monetary policy around 1990.