It’s ‘foolhardy’ to think the Fed will cut interest rates at all in 2023, BlackRock’s bond chief says

Expecting a reduction in Federal Reserve interest rates this year is “foolhardy,” according to BlackRock’s bond chief.
On Monday, Rick Rieder stated, “They keep coming out and telling you that they’re not going to do it.”
Stocks may return 9% this year, but the CIO added that they will probably be very volatile.

According to BlackRock’s bond director Rick Rieder, investors are deluded if they think the Federal Reserve will lower interest rates at all in 2023.

Two Fed presidents, Raphael Bostic of the Atlanta Fed and Mary Daly of the San Francisco Fed, both stated on Monday that they anticipate the US central bank to hike interest rates past 5% and keep them there in order to contain inflation.

According to Rieder, chief investment officer for fixed income at $10 trillion asset management BlackRock, the policymakers’ most recent statements showed the Fed won’t ease monetary policy at all this year.

On Monday, he stated on Fox Business’ “The Claman Countdown” that “markets have been quite enthusiastic that the Fed is going to tighten and then start relaxing again.”

They keep coming out and saying you they won’t do that, so I think it’s foolish.

In terms of tightening, he continued, “I don’t think they need to go that far, but the thought of easing doesn’t make sense for a while.

According to the CME FedWatch Tool, two-thirds of traders now anticipate that the federal funds rate will be at or below its present value of about 4.5% by the end of 2023.

But according to Rieder, the central bank won’t start cutting rates until 2024 because it hasn’t yet seen the economic evidence that would lead it to change its stance from rises.

The US Consumer Price Index for November revealed that inflation was still running at 7.1%, close to a four-decade high and far beyond the Federal Reserve’s 2% objective.

Meanwhile, the US economy added 263,000 new jobs last month, which was better than projected. This means that the Fed still has room to hike interest rates without seeing a spike in unemployment.

Before backing down, “they need to see the data,” Rieder told Fox Business.

He continued, “There have been a number of predictions that they’ll start tightening in ’23 and then start easing again. “I don’t think you will observe it because you must first observe a significant softening of the data and goal inflation. It isn’t a ’23 event, in my opinion.”

After Daly and Bostic indicated the Fed will keep interest rates above 5% for the most of 2023, the stock market traded in a mixed bag on Monday.

The Nasdaq was up 0.63% at the closing bell while the S&P 500 and Dow Jones Industrial Average both declined by 0.08% and 0.34%, respectively.

Investors should select corporate bonds and other lower-risk assets that are expected to produce tangible returns, according to Rieder, who also predicted that uncertainty around the Fed’s tightening campaign will continue to cause volatility to be injected into equities markets.

“Could stocks produce an 8 to 9% positive return if you consider what they will do this year? Maybe, “said Rieder.

But it will be volatile, he continued. Nirvana is when you can trim 6% from high-quality assets.


  1. It’s ‘foolhardy’ to think the Fed will cut interest rates at all in 2023, BlackRock’s bond chief says (
  2. Don’t Buy US Stocks yet As Wage Slowdown Won’t Budge the Fed, UBS Says (

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