BlackRock Warns of Inflated Fed Rate Cut Expectations

BlackRock has issued a concerning report stating that market expectations for the Federal Reserve’s interest rate cuts this year are overly optimistic, overlooking the potential impact of rising inflation. The report suggests that market forecasts anticipate four to five 25 basis point reductions by the Fed in 2023. However, BlackRock predicts upcoming tariffs will increase inflation and lead to global borrowing costs exceeding pre-pandemic levels. This firm anticipates that planned new U.S. tariffs and international responses will further support this view, with interest rates and long-term bond yields expected to remain elevated above pre-pandemic levels.