Fed and other central banks should ease policy, hedge-fund boss says

Rate-setters in the US and abroad should embrace easier policy, the founder of the world’s largest hedge-fund, Bridgewater Associates, said on Thursday.

Speaking on the margins of the World Economic Forum in Davos, Switzerland, on a Bloomberg panel, Ray Dalio said central banks needed to be careful they didn’t end up ‘pushing on a string’, given the “asymmetric risks” that existed.

The latter term described the fact that given currently low inflation and interest rates it was easier to tighten policy quickly should it become necessary than to do the opposite.

Dalio emphasised the need for central bankers to take into account the debt cycle, which was longer than any one economic cycle.

On the previous day, Dalio told CNBC "I think a move to a quantitative easing would bolster psychology."

"The risks are asymmetric on the downside, because asset prices are comparatively high at the same time there's not an ability to ease," he told CNBC.

In his opinion, it was more likely that the US Federal Reserve’s next move would be to lower interest rates, rather than the opposite.

"This will be a negative for the [US] economy, this market movement. The Fed should remain flexible. It shouldn't be so wedded to a path. We're going to have a lower level of growth in six months from now ... about 1.5%," Dalio said.