Early Thursday morning Beijing time, the Federal Reserve announced its highly anticipated interest rate decision - the Fed announced a 50 basis point cut, the first rate cut in nearly four and a half years.

Although the U.S. stock market was delighted by the Federal Reserve's significant interest rate cut, 'bond king' Jeff Gundlach still believes that the rate cut came too late. This is because the increasing number of job losses in the United States indicates that the U.S. economy has entered a recession.

Gundlach: The Federal Reserve's interest rate cut came too late.

In fact, as early as the first half of this year, Gundlach had been warning of the trend of weak employment data in the United States. In early August, Gundlach also stated that he believed the Federal Reserve should cut rates at the rate decision at the end of July.

Therefore, even though the Federal Reserve chose to cut rates by 50 basis points this week, Gundlach still believes that their action came 'too late'.

Gundlach believes that the U.S. economy has slowed down to a recession level and points out that there are many concerns in the market about the weakness in the U.S. job market.

He stated, 'We are already in a recession... I see a lot of layoff announcements.'

Despite the continuous growth of the U.S. GDP in the past year, recruitment data has been steadily slowing down. According to a report from consulting firm Challenger, Gray & Christmas, layoffs in American companies increased by 193% last month. The report also shows that recruitment plans for U.S. companies this year have reached the lowest level on record, with a 41% decrease in recruitment plans in August compared to the same period last year.

Has the performance of the Federal Reserve in the past few years been unsatisfactory?

Nevertheless, most experts believe that the foundation of the U.S. economy remains solid. The U.S. GDP grew by 3% in the last quarter. At the same time, the unemployment rate remains near historic lows, with a rate of 4.2% in August.

However, Gunalak expressed that he would give the Federal Reserve a grade of 'F' for its performance in the past few years.

He believes that the Federal Reserve raised interest rates by 525 basis points in 2022 and 2023 to curb inflation, but they should have responded to inflationary pressures earlier, thereby preventing interest rates from remaining at high levels for too long.

Now, with inflation in the U.S. clearly cooling down and employment market data continuously declining, Gunalak believes that the pace of interest rate cuts by the Federal Reserve has also slowed down.

He stated, 'The Federal Reserve has fallen far behind the situation, and they should act together.'

Editor/ping