says<\/a> the Fed \u201cshould not cut interest rates\u201d despite the pressure to do so.<\/p>\nDalio says that over the longer term, when the current Fed Governor Jay Powell\u2019s term ends in May of 2026, the Fed could, however, end up cutting rates due to political pressure.<\/p>\n
\u201cThere\u2019s a great deal of uncertainty and there\u2019s a deterioration in sentiment, but really the actual economy. So they (the Fed) are in a difficult position.<\/em><\/p>\nI think that when we look farther out, we\u2019re dealing with the political aspects\u2026 I think that when there\u2019s a new Fed chair, there will likely be more inclination to cut rates because it\u2019s an old story of conflict between those in power, in political [power], who like stimulation. And because of the enormous impact of interest rates on debt service, because the debts are so large, there\u2019s going to be pressure that way.\u201d<\/em><\/p>\nAccording to Dalio, the aggressive easing of US monetary policy could negatively impact the bond market.<\/p>\n
\u201cI think the markets, if they were to see a too aggressive cut in monetary policy, too inappropriate cut, that it would actually be bad for the bond market\u2026.<\/em><\/p>\n\u2026 watch the yield curve. As you get rates rising by long rates and you have also at the same time, let\u2019s say, movement down in the dollar and rises in gold, that kind of dynamic is reflecting a movement out of the bonds. Because the value of money matters a lot.\u201d<\/em><\/p>\n