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BlackRock’s Rick Rieder sees first rate cut in mid-2024, thinks market is pricing in easing too soon

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BlackRock fixed income chief Rick Rieder thinks the Federal Reserve should start enacting small rate cuts in the middle of 2024, later than the current market pricing suggests. “I think the market’s ahead of itself,” Rieder said on CNBC’s ” Closing Bell .” He said market expectation of a March rate cut is “over the top.” “In May, June, I think they’ll start cutting,” Rieder said. “They’ll start doing something like 25-basis-point cuts to get the real rate down to what is a level…that by the way, would be restrictive, and it’s just too restrictive today.” Market pricing indicated about a 60% chance of a rate cut starting March next year, according to the CME FedWatch Tool. Moreover, futures are pointing to cuts totaling 1.25 percentage points by the end of the year, the equivalent of five quarter percentage point reductions. Buy income The asset management giant’s CIO of global fixed income believes that the economy could skirt a severe downturn. “I don’t think the economy is falling off a cliff. I don’t think I don’t believe that we’re going to have a significant recession,” he said. The Fed’s next meeting and last of the year is Dec. 12-13. The central bank enacted a series of 11 interest rate hikes, taking its policy rate to the highest in 22 years at a target range between 5.25%-5.5%. Rieder believes that going forward, equities won’t have as good a year as 2023, but investors can still easily enjoy some solid returns, “I don’t think you’re going have the spectacular risk performance like you saw in beta this year,” Rieder said. “But I think you could still have a pretty good year.,,, I would build in your portfolio, a lot of income and you could do it by not taking a lot of risks today.”

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