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PIMCO's Gross expects U.S. target rate at 2 percent in December

NEW YORK
Wed Jun 25, 2008 2:43pm EDT

NEW YORK (Reuters) - The fed funds target rate, which the Federal Reserve held unchanged at its policy meeting on Wednesday, will still be at 2 percent at year-end, the manager of the world's biggest bond fund said.

Speaking on CNBC television, Bill Gross, chief investment officer of Pacific Investment Management Co, or PIMCO, said that he expected core U.S. inflation would come down over the next 12 months, adding that the fed funds rate is neutral and will remain at 2 percent in December.

Gross said he believes the Fed is "jawboning appropriately" on inflation.

"There is still a lot of leverage to be unwound" in the U.S. and global economies, he added.

(Reporting by John Parry and Jennifer Ablan)


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