BlackRock sees ‘reasonable chance’ of Fed raising rates to 6%
The U.S. Federal Reserve could raise interest rates to 6% and keep them there for an extended period of time to fight inflation, said Rick Rieder, chief investment officer of global fixed income at BlackRock, the world’s largest asset manager.
Federal Reserve Chair Jerome Powell told U.S. lawmakers on Tuesday that the U.S. central bank could become more aggressive in its rate hike path following recent strong economic data.
“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%,” Rieder said in a note on Tuesday.
The Fed’s policy rate is currently in the 4.50%-4.75% range.
As of December, officials saw that rate rising to a peak of around 5.1%, a level investors expect may move at least half a percentage point higher now.
Goldman Sachs said in a note on Tuesday that it had raised its forecast for the so-called terminal rate by 25 basis points to a range of 5.5%-5.75%.
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