BlackRock: Fed cuts rates as expected, offers no extra guidance

BlackRock: Fed cuts rates as expected, offers no extra guidance

November 8, 2024

Interest Rates Fed
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Jean Boivin, Head of BlackRock Investment Institute, comments on the Fed's recent rates decision:

'Markets were little changed after the Federal Reserve cut rates by 25 basis points as expected today, with the U.S. election results much more consequential this week. In fact, perhaps the most interesting thing about today’s Fed press conference was what was missing. Fed Chair Powell reiterated the Fed’s meeting-by-meeting approach, stating that the destination of policy rates – and the pace of cuts to get there – is not yet decided. He batted off any questions about the economic impact of President-elect Donald Trump’s potential policy agenda, stating he would await actual policy action. He provided no comment on financial conditions still being relatively loose after one of the sharpest hiking cycles in Fed history. And he pointed out that inflation has come down a lot without “the kind of sharp increase in unemployment that has often accompanied programs of disinflation” – but offered no explanation for this. 

We believe structural forces are at play that can help explain this unusual macro environment, including geopolitical fragmentation and aging workforces, and do not think this is a typical business cycle. The unwind of pandemic-era supply shocks and a temporary rise in immigration explain much of inflation’s cooling, in our view. We think recent market volatility has been partly driven by markets viewing structural changes through the lens of a typical business cycle.'

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