Bill Gross: Fed tapering plan may be hasty

From MarketWatch.com

OUTSIDE THE BOX
June 25, 2013, 3:54 p.m. EDT

Bill Gross: Fed tapering plan may be hasty
By William H. Gross

“June Gloom,” as the fog and clouds that often linger over the Southern California coast this time of year are known, appears to have spread to the Federal Reserve. At his press conference last week, Fed Chairman Ben Bernanke said the central bank may begin to let up on the gas pedal of monetary stimulus by tapering its asset purchases later this year and ending them in 2014.

We agree that QE must end. It has distorted incentives and inflated asset prices to artificial levels. But we think the Fed’s plan may be too hasty.

Fog may be obscuring the Fed’s view of the economy—in particular, the structural impediments that will inhibit its ability to achieve higher growth and inflation. Bernanke said the Fed expects the unemployment rate to fall to about 7% by the middle of next year. However, we think this is a long shot.

Read more.