Bill Gross expects 50 bp cut in fed funds

Bill Gross tells Dow Jones that PIMCO expects a 0.5 percentage-point reduction in the fed-funds target rate by the Sept. 18 Fed policy meeting

"Certainly what they said Friday morning in terms of the discount rate cut, and the language of the statement that accompanied it, were dramatically different than two weeks prior at the meeting," Gross told Dow Jones. "Over the past week, we have seen a dramatic change.

"The statement that they issued that accompanied the cut in the discount rate suggested that the economy has been worsening...it suggested that the problems in the credit markets would have a noticeable impact on economic growth in the future. Therefore - although they didn't say this, it's my interpretation - the potential for a cut in fed funds is much more likely now, as opposed to several weeks ago."