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Traders anticipate multiple rate reductions from the Federal Reserve in this year. What if there’s none?
Larry Fink of BlackRock, the CEO of an asset manager, mentioned this possibility in an interview he gave at the Economic Club of New York. Fink, in an interview, suggested that the Trump tariffs might cause inflation and require higher interest rates to cool the situation.
“This notion that the Federal Reserve’s gonna … ease four times this year, I see zero chance of that,” Fink said, according to a Bloomberg video of the event. “I am more worried about the possibility of an inflationary spike that would push rates higher than what they are currently.”
The U.S. Federal Reserve kept its benchmark interest rate unchanged in mid-March, at a range between 4.25% and 4.5%. Futures traders assume a range of as low as 3.25% to 3.5% as of the Fed’s December meeting, implying as many as four quarter-percentage-point cuts, according to the CME’s FedWatch tool; the odds of the rate remaining unchanged by then, or even rising, barely register.
Fed Chair Jerome Powell on Friday said “It’s not clear to me at this time what the appropriate path for monetary policy will be,” during an appearance that came two days after President Donald Trump issued trade policy guidance—in short, a new set of global tariffs—that have roiled markets. (Read Investopedia live coverage of Monday trading here.
Fink stated in his interview with CBS on Monday that “the economy is weakening right now.” Fink said most CEOs that he speaks to “would probably say we’re in a recession at the moment.”
Recently, many Wall Street economists have raised their perceived odds of recession.
