Gross: Zero-bound interest rates may kill credit

PIMCO's Bill Gross has warned as US interest rates head towards zero, they could be a regressive influence on the economy and may kill rather than create credit.

The manager of the world's largest bond fund said there could be significant costs ahead for a global economy and financial marketplace that assumes cheap and abundant central bank credit is a positive dynamic. He said Federal Reserve chairman Ben Bernanke has been "open and honest about the drawbacks of a zero interest rate policy," particularly for the likes of pension funds, savers and insurance companies, but has continued with QE under the assumption not doing so would be far worse. "At the heart of the theory, however, is that zero-bound interest rates do not always and necessar...