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Expect more rate cuts from Federal Reserve, says billionaire investor Ray Dalio

Updated : December 25, 2019 06:36 AM IST

Hedge-fund billionaire Ray Dalio on Tuesday said he expects more rate cuts from the US Federal Reserve as the global economy is slowing down.

In an interview with CNBC's Christine Tan, Dalio warns of global slowdown concerns and said that a 'downturn is inevitable.

"Over the years, there are always paradigm shifts. One gets used to a certain type of environment and then there are periods of time where they shift to a very different kind of environment. For example, the 1920s were the exact opposite of the 1930s. So the transition from the 20s to the 30s shocked people, 40s were different from the 50s and so on,” he said.

"I think the Fed made a mistake and it understands that it made a mistake. Assuming that this is a normal cycle and what they thought was if you pick up growth and lower unemployment, you are going to produce inflation. We are living in a different world now for various reasons. The world has a lot of excess capacity, the world of digitalisation and so on in which that is not the big thing. The big thing is the fact that we are approaching an end of the power of central banks to affect, to stimulate. So the big thing is that we have a very big asymmetric risk," said Dalio.

“If the economy turns down and we are late in the cycle, so a downturn will come, there is a lack of ability by central banks to be able to be stimulative and that is happening at a time when there is great wealth polarity,” he further mentioned.
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