Fed Is In No Hurry To Raise Rates, BlackRock's Rosenberg Says
Why It Matters
A slower Fed pace tempers expectations for higher borrowing costs, shaping corporate financing, equity valuations, and broader economic outlook.
Key Takeaways
- •Inflation remains sticky; no clear deceleration trend observed
- •Labor market tightening adds pressure, supporting potential rate hikes
- •Oil price shock from war fuels supply‑side inflation risk
- •Fed likely moves slowly, aiming to catch up with markets
- •June FOMC expected neutral stance, not aggressive tightening
Summary
BlackRock senior economist Michael Rosenberg says the Federal Reserve is unlikely to rush a series of rate hikes, even as recent data show persistent inflation and a surprisingly tight labor market.
He notes that inflation has not decelerated, with the three‑month average still near 1.88%, and that a fourth supply‑side shock—higher oil prices linked to the war—adds to price pressures. The labor market’s strength, highlighted by a robust jobs report, raises the bar for any further tightening.
Rosenberg warned, “Moving to hike and then hike again feels hawkish,” and added that “the first reaction is not the last reaction,” suggesting the latest jobs numbers may contain one‑off components that will fade. He expects the June FOMC to adopt a neutral stance rather than aggressive hikes.
For investors, the Fed’s cautious pace means bond yields may stay subdued and equity valuations could remain elevated, while markets that have already priced in a full‑year hike may need to adjust as the central bank plays catch‑up.
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