Bill Gross, manager of the world’s biggest bond fund, said the European Central Bank should adopt policies to help the euro depreciate.
“Ultimately, what they want to do is weaken their currency relative to the dollar and other currencies so that they can become more competitive,” Pacific Investment Management Co.’s founder Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene today. At the same time, “it is hard to see the ECB succeeding” in driving the euro down to a level of $1.15 or below, he said.
The ECB yesterday left its benchmark rate unchanged at a record low of 0.75 percent and cut its economic forecasts. The Frankfurt-based central bank now expects gross domestic product in the 17-nation euro area to shrink 0.5 percent this year before growing 1 percent in 2014. President Mario Draghi said that the “exchange rate is not a policy target” for the ECB.
“Nominal and real exchange rates by and large continue to be near their long term averages,” he said.
The ECB is “the toughest of the central banks these days,” Gross said. “But I think at this point with European unemployment at 12 to 13 percent as opposed to U.S. unemployment at 7.7 percent, they have to do something.”
To contact the reporters on this story: Stefan Riecher in Frankfurt at email@example.com; Liz Capo McCormick in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com