World’s Largest Asset Manager Blackrock Predicts No Fed Rate Cuts This Year Cryptocurrencies and ICOs

The world’s largest asset manager, Blackrock, does not expect the Federal Reserve to cut interest rates this year. “That’s the old playbook when central banks were rushing to bail out the economy when recession hit. They are now causing the recession to combat sticky inflation, and that makes rate cuts unlikely, in our view,” the firm’s strategists said.

Blackrock Interest Rate Prediction

Blackrock, the world’s largest asset manager, published a weekly commentary Monday explaining the state of the US economy and why it doesn’t expect the Federal Reserve to cut interest rates this year.

While noting that “markets were quick to price in rate cuts as a result of banking sector turmoil and the Fed’s signal for an upcoming pause,” Blackrock strategists wrote:

We see no rate cuts this year: that’s the old playbook when central banks would rush to bail out the economy when recession hit. They are now causing the recession to combat sticky inflation, and that makes rate cuts unlikely, in our view.

“Stocks have held up on hopes of rate cuts that we don’t see coming. We believe the Fed could only achieve the market-priced rate cuts if a more severe credit crunch were to occur and cause an even deeper recession than we expect,” the strategists explained.

“Inflation is likely to prove even tighter than the Fed expects without a deep recession, in our view. US CPI data for February confirmed our view that inflation is not yet on track to set at the Fed’s target,” they added.

Blackrock strategists continued: “A recession is predicted as central banks try to bring inflation down to policy targets. It’s the opposite of past recessions: in our view, rate cuts are not on track to help support risky assets.” They noted:

In the US, it is now evident in financial cracks arising from higher interest rates as well as rate sensitive sectors. Higher mortgage rates have affected new home sales. We also see other warning signs, such as deteriorating CEO confidence, delayed capital spending plans, and consumers drying up savings.

Do you think the Federal Reserve will cut interest rates this year? Let us know in the comments section.

kevin helms

Kevin, an Austrian economics student, found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.