Bill Gross: Fed Won`t Raise Rates Until 2011

The Bond King, Bill Gross thinks that the Federal Reserve won`t raise interest rates until 2011 because inflation and economic growth remain weak:

"The output gap and the core inflation rate is probably heading downward for the next 12 to 24 months. If that’s the case and if unemployment stays close to 10 percent, then there’s no reason for the Fed to begin to raise interest rates."

Even though 10 Year Treasury yields may go up 30 or 40 basis points because of the removal of some of the stimulus:

"So if this money disappears—and I’ve been recommending for the Fed to continue these programs—but if they discontinue them, than interest rates may rise by that 30 to 40 basis points gradually over the next three to six months”