Monetary policy has exhausted its effectiveness, with asset prices distorted by years of near-zero rates, and fiscal policy would be needed to get the economy back on a stronger footing, Gross said Friday in an interview with Tom Keene and Michael McKee on Bloomberg Radio.

“I think they did the right thing,” he said, citing current financial conditions. “When they did the wrong thing, and this is way back in terms of past history, they went below 2 percent in terms of the short-term rate. They didn’t have to do that, they didn’t have to go to zero. So now getting back up there will wreak havoc on asset markets.”

The Federal Reserve opted to keep rates near zero on Thursday, citing concerns about a possible slowdown in global growth, low U.S. inflation and market turbulence over the past month.

Traders in the federal funds futures market marked down the chances of a December rate increase to below 50 percent following the decision, from 64 percent on Wednesday. That’s based on the assumption that the effective fed funds rate will average 0.375 percent after liftoff.

Asked how long the distortions from low interest rates will continue, Gross, who runs the $1.4 billion Janus Global Unconstrained Bond Fund, said it may take another decade.

History would indicate that “if we had 20 or 25 years of fat, in terms of an expanding economy, expanding debt, then perhaps we’ll have to pay the price for at least another five or another 10” years, he said. “You need low interest rates in order to recapitalize, to term out debt.”