A BlackRock executive said in a statement that the Fed may not need to raise interest rates any further to combat inflation, as the turmoil in the banking sector last month and a recent series of labor data point to a slowdown in the US economy.
As Economy Slows, FED May Not Need to Raise Rates in May, According to BlackRock
Rick Rieder, global fixed income investment manager of BlackRock, the world's largest asset manager, made statements on the subject.
He said that while the closely-watched Department of Labor employment report on Friday showed U.S. employers maintained a strong hiring pace last month, it was also noted for slowing wage growth and job growth that remained below the three-, six-, and 12-month moving averages.
According to Rieder, these data paint a picture of a slowing economy, along with labor market figures released last week and expectations for tighter credit conditions after two US banks went bankrupt last month.
"While the jobs report released last Friday is not alarming in any way, it gives investors a clearer picture of economic conditions that should have been slower in concrete terms," Rieder said in a report.
The Fed launched one of the most aggressive rate hike cycles in decades to ease price pressures last year, and it expects borrowing costs to remain at current levels through the end of 2023.
For now, investors are more dovish and expect policymakers to cut rates later in the year and pull the Fed funds rate to 4.35% from the current 4.75% to 5% range.
Investors will closely monitor the inflation report, which will be released on Wednesday, to gauge the near-term course of interest rates.
*Not investment advice.