Gundlach says new Fed chair Warsh signals tougher stance on monetary policy

DoubleLine Capital chief Jeffrey Gundlach told CNBC that the newly appointed Federal Reserve chair, Kevin Warsh, is adopting a more hawkish tone than many investors anticipated. Warsh reiterated the Fed’s commitment to achieving 2% inflation and stressed that the committee will deliver price stability, a message Gundlach said had been missing for years.

"He is absolutely telling you that he plans on delivering on price stability. So that means... we're not going to have such easy money policy as everybody thought maybe Chairman Warsh would do back in the first quarter of this year, when everyone was counting on rate cuts," Gundlach said on the network’s "Closing Bell."

Warsh did not provide an individual rate projection in the Fed’s dot-plot and indicated a review of the central bank’s communications framework. Gundlach interpreted the emphasis on price stability as lowering the risk of overly accommodative policy that could reignite inflation, and he suggested it strengthens the case for holding long-term U.S. Treasury bonds.

"I think there's a greater reason to own long-term Treasuries today now that the new sheriff is in town," he added, noting that Warsh’s credibility is tied to bringing inflation down and that aggressive rate cuts appear less likely.