BlackRock (NYSE:BLK)'s Chief Investment Officer for global fixed income, Rick Rieder, has expressed his anticipation that the Federal Reserve might soon end its current cycle of interest rate hikes, designed to control inflation. This perspective was shared after the Federal Reserve's decision to pause rate hikes twice this year. Despite maintaining interest rates at a range of 5.25% to 5.5%, the highest since 2001, officials have not ruled out another increase before year-end.
Rieder oversees approximately $2.4 trillion in assets and suggests that rate cuts may be on the horizon next year. The Federal Reserve's decision to pause coincides with new economic projections unveiled after their meeting. These forecasts indicate that a majority of central bank officials predict rates will climb to 5.6% by the close of 2023, implying a potential quarter-point rise this year.
The Federal Reserve is scheduled to meet twice more in the current year, in November and December. In Rieder's view, the central bank might opt for one final rate hike later this year before entering a period of stability. He believes that this pause will result in higher yields on fixed income assets persisting for some time.
Furthermore, Rieder predicts that the Federal Reserve could initiate rate cuts in the latter half of 2024 as the labor market begins to show signs of further softening. This comes as the economy exhibits signs of slowing down, presenting an interesting challenge for the Federal Reserve as it tries to wrap up its current process.
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