Bill Gross, managing director at PIMCO, applauded the Federal Reserve for buying $1 trillion in bad debt as part of a larger effort to loosen lending and boost liquidity, in a recent interview with Kathleen Hays on Bloomberg Television.
The latest policy actions will allow the Fed to keep interest rates at historic lows for the next six to 18 months and promote reflation, he said.
However, it will have consequences down the road, namely a weakening dollar and a rise in inflation.
Ultimately, the Fed will have to expand its balance sheet to five or six trillion dollars in order to sustain real economic growth, he said.
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