PIMCO: Fed won't increase interest rates until 2011


Don't look for the U.S Federal Reserve to increase short-term interest rates anytime soon. Paul McCulley, managing director of PIMCO, the world's largest bond fund, said the Fed won't increase borrowing costs before 2011, due to the threat of deflation.

Key short-term interest rates will not rise "before 2011 and I'm not only forecasting that as a professional forecaster, but positioning portfolios on that proposition as well," McCulley said in an interview with Australian Broadcasting Corp., Bloomberg News reported Monday. "What I'm worried most about is simply a shortfall in global aggregate demand relative to supply potential."