The world’s largest asset manager, Blackrock, does not see the Federal Reserve cutting rates of interest this year. “That’s the old playbook when central banks would rush to rescue the economy as recession hit. Now they’re causing the recession to fight sticky inflation – and that makes rate cuts unlikely, in our view,” stated the company’s strategists.
Blackrock’s Interest Rate Prediction
Blackrock, the world’s largest asset manager, released weekly commentary Monday describing the state of the U.S. economy and why it does not see the Federal Reserve cutting rates of interest this year.
While keeping in mind that “Markets have been quick to price in rate cuts as a result of the banking sector turmoil and the Fed signaling a coming pause,” Blackrock’s strategists composed:
We don’t see rate cuts this year – that’s the old playbook when reserve banks would hurry to save the economy as economic crisis hit. Now they’re triggering the economic crisis to eliminate sticky inflation – which makes rate cuts not likely, in our view.
“Stocks have held up due to hopes for rate cuts that we don’t see coming. We think the Fed could only deliver the rate cuts priced in by markets if a more serious credit crunch took hold and caused an even deeper recession than we expect,” the strategists discussed.
“Inflation is likely to prove even stickier than the Fed expects without a deep recession, in our view. The February U.S. CPI data confirmed our view that inflation is still not on track to settle at the Fed’s target,” they included.
The Blackrock strategists continued: “Recession is foretold as central banks try to bring inflation back down to policy targets. It’s the opposite of past recessions: Rate cuts are not on the way to help support risk assets, in our view.” They kept in mind:
In the U.S., it’s now apparent in the monetary fractures emerging from greater rates of interest on top of rate-sensitive sectors. Higher home loan rates have actually harmed sales of brand-new houses. We also see other indication, such as degrading CEO self-confidence, postponed capital costs strategies and customers diminishing cost savings.
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