Expectations regarding the Fed’s interest rate policy are once again in the spotlight. Rick Rieder, CIO of BlackRock Global Fixed Income and head of the Global Allocation team, said on Fox Business that he expects the Fed to cut interest rates in September.
“My guess is that the Fed will deliver a message about maintaining economic stability. However, the current data, particularly the slowdown in employment, creates a favorable environment for a rate cut,” Rieder said.
Rieder stated that interest rates are currently higher than they should be, adding, “Personally, I think a faster and stronger cut is possible. Even a 50 basis point cut is possible.”
Drawing attention to the weakness in the labor market, Rieder emphasized that employment growth, excluding the healthcare sector, has been negative in the last three months, signaling a slowdown in the economy.
Rieder, noting that inflation is still above the Fed’s target but does not pose a serious threat, said, “Core personal consumption expenditures (PCE) has been at 2.8% on an annualized basis for the last three months. This is not a scary figure.”
The program also addressed reports that Rieder could replace Fed Chair Jerome Powell. Responding to these claims, Rieder stated, “It’s an honor to even be considered for such a role. However, my priority right now is to generate returns for our investors.”
*This is not investment advice.