Rick Rieder, managing director and chief investment officer of fundamental fixed income for BlackRock Inc., speaks during the Institute of International Finance Annual Membership Meeting in Washington, D.C., U.S., on Friday, Oct. 11, 2013. The world’s largest asset manager sees the U.S. federal funds rate peaking at 6% after Fed Chair Jerome Powell warned interest rates are likely to head higher than the central bank previously expected. “We think there’s a reasonable chance that the Fed will have to bring the Fed Funds rate to 6%, and then keep it there for an extended period to slow the economy and get inflation down to near 2%,” BlackRock’s chief investment officer of global fixed income Rick Rieder wrote in response to Powell’s testimony before the Senate Banking Committee on Tuesday. The economy is more resilient than expected, Rieder said, pointing to the most recent jobs report and consumer price index reading. “This is partly due to the fact that today’s economy is no longer as interest-rate sensitive as that of past decades, and its resilience, while a virtue, does complicate matters for the Fed,” he wrote in the note.
Source: CNBC – Bonds

Federal Reserve Chairman Jerome Powell on Tuesday cautioned that interest rates are likely to head higher than central bank policymakers had expected. Citing earlier data this year showing that inflation has reversed the deceleration it showed in late 2022, the central bank leader warned of tighter monetary policy ahead. “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in remarks prepared for two appearances this week on Capitol Hill. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Source: CNBC – Bonds