BlackRock Predicts How Much The Fed Will Cut Interest Rates This Year

Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, predicted that the FED could cut interest rates twice this year as inflation moderates in the coming months.

“It's getting harder and harder for them to do this, but I still think they can do it,” Rieder said in an interview with Bloomberg Television. Rieder's comments were made in the face of warmer-than-expected economic data in recent weeks, especially the March consumer prices report, pushing Treasury bond yields to the highest levels of 2024.

Thereupon, market participants readjusted their expectations regarding the Fed's easing. Swap traders are now forecasting around 40 basis points of interest rate cuts by the end of the year, representing less than two full quarter-point cuts.

Rieder explained that BlackRock is reducing its own interest rate risk and opting for shorter-term investments.

But Rieder believes the opportunity to widen the yield curve is at hand. “Once you see a few good inflation reports and evidence that employment is slowing down, you can start extending the maturity,” said Rieder, adding that a change of strategy may be on the horizon depending on future economic data.

*This is not investment advice.