Gundlach of DoubleLine says the Fed resembles Mr. Magoo and is too focused on short-termism.

Jeffrey Gundlach, CEO of DoubleLine Capital, believes the Federal Reserve is overlooking the bigger picture once again.

"According to Gundlach, the Fed resembles Mr. Magoo while driving around and bumping into things. However, the Fed became more systematic and managed to lower inflation. Recently, there has been a rising trend for the past five months, which has caused the Fed to become short-termist, reacting too much to short-term data rather than being strategic."

Gundlach, a renowned fixed-income investor whose firm oversees $95 billion, made the remarks prior to the most recent consumer price index reading on Wednesday. The CPI rose by 0.4% on a seasonally adjusted basis, resulting in a 12-month inflation rate of 2.9%.

The core CPI rate came in slightly below forecasts on both a monthly and annual basis, but still indicates that the Fed must continue its efforts to achieve its 2% inflation target.

"The Fed is zigzagging due to the CPI month-over-month change, according to Gundlach. The market has shifted from anticipating aggressive Fed cuts to expecting only one cut in 2025."

Since September, the Fed has reduced benchmark rates by one percentage point, which was followed by a half-point reduction in the same month. In December, the central bank predicted only two quarter-point rate cuts in 2025, which is less than the four cuts it previously forecast.

"Gundlach stated that the Fed is now aligned with the market, and there are no additional signals for a change. This aligns with the Fed's decision to slow down its monetary policy adjustments."

According to CME Group, futures pricing indicated a high likelihood that the Fed would maintain its hold at the Jan. 28-29 meeting, but shifted towards the possibility of two quarter-point rate cuts throughout the year, assuming incremental changes in quarterly percentages.