Rising energy prices and increased inflation risk due to the US-Iran conflict negatively impacted the leading cryptocurrency Bitcoin (BTC) and expectations regarding the Federal Reserve.
Rising inflation expectations stemming from the US-Iran conflict have eliminated the possibility of a Fed interest rate cut in 2026, while raising the possibility of an interest rate hike.
While there is increasing talk of raising interest rates if necessary, BlackRock has offered a completely opposite analysis.
Navin Saigal, Head of Global Fixed Income Business for the Asia-Pacific region at BlackRock, the world’s largest asset management company, stated that the Fed may opt for interest rate cuts despite increasing expectations of rate hikes.
Speaking to Bloomberg TV, Navin Saigal noted that, contrary to expectations, the structural dynamics justifying a cycle of interest rate cuts have matured.
Newly appointed FED Chairman Kevin Warsh stated that the US central bank has sufficient justification and infrastructure to move towards interest rate cuts rather than raises.
A BlackRock executive argues that market expectations of interest rate hikes under the new Fed Chairman Warsh are overpriced, creating a “mispricing.”
He stated that current economic conditions actually make a rate cut more likely, saying, “If you force me to choose between raising and lowering rates, I think there are more factors supporting the possibility of a rate cut right now. I think there will be some pressures on the job market in the coming period. This will lead the Fed to either keep rates at least stable or lower them.”
A BlackRock executive argues that a rate cut is still possible in 2026, but a cut is not expected in June. According to CME FedWatch data, the probability of the Fed keeping interest rates unchanged in June is priced at 98.1%, while the probability of a rate increase is priced at 1.9%.
*This is not investment advice.