BlackRock strategists are predicting a slower pace of interest rate cuts by the Federal Reserve, citing a more stable economic outlook. In a recent report, the investment firm stated that they believe the Fed will have room to cut rates to 3.5% or slightly higher by early 2025.
The analysis is based on the minutes of the Fed’s September meeting, which indicated a gradual approach to interest rate reductions. Rick Rieder, BlackRock’s chief investment officer of global fixed income, emphasized that the market’s previous expectations of a “hard landing” for the economy were overly pessimistic.
Rieder noted that recent movements in short-term interest rates suggest a more balanced valuation. While inflation progress has slowed, he believes that the Fed has effectively brought inflation close enough to its target to continue normalizing interest rates while maintaining balanced economic objectives.
