The next meeting of the Federal Reserve is scheduled for March 21 and 22.
The world’s largest asset manager, BlackRock, has weighed in on the issue of interest rate hikes by the US Federal Reserve. According to BlackRock, upcoming decisions by the Federal Reserve are likely to see rates increase almost 6%. by CNBC report, the prediction follows recent testimony from Federal Reserve Chairman Jerome Powell. Speaking before the Senate Banking Committee on Tuesday, Powell warned that it seems more likely that interest rates will rise more than the central bank initially projected.
Agreeing with Powell, BlackRock’s chief investment officer, Rick Rieder believes further hikes remain the only way to manage the current state of the economy. He also sees the continued rise as the only way to keep inflation to a minimum. Rieder wrote in part:
“We think there’s a reasonable chance the Fed may have to bring the fed funds rate to 6% and then keep it there for an extended period to slow the economy and bring inflation down to around 2%.”
The Federal Reserve continues to battle a resilient economy as experts predict further rate hikes
Rieder also noted that the current economy is more resilient than what the Federal Reserve has had to deal with. He highlighted the fact that today’s economy is no longer as sensitive to interest rate hikes as it was a few decades ago. Therefore, the reason why the problem remains difficult for the Federal Reserve to solve.
Unsurprisingly, Powell’s recent comment has drawn a lot of attention and experts are expecting larger increases. For example, just as BlackRock forecasts a terminal rate of 6%, Morgan Stanley economists also believe that Powell’s testimony will require larger increases of at least 50 basis points.
Last month the central bank raised rates by 25 basis points to bring the rate to around 4.50% or so. However, with high expectations of a 50 basis point increase, the rate will be somewhere in the 5% to 5.25% range.
Thus, the anticipation is in full swing for the next Federal Reserve meeting scheduled for March 21-22.
next
Mayowa is a crypto enthusiast/writer whose conversational nature is quite evident in his writing style. He strongly believes in the potential of digital assets and takes every opportunity to reiterate it. He is a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from cryptocurrency, however, Mayowa’s imagined distractions include soccer or discussions of world politics.
