A senior official at the fund manager said the economy today “isn’t as sensitive to interest rates as it was in decades past.”
BlackRockthe largest fund manager in the world, stated that the interest rate hikes could follow despite the fact that currently, being at the 5% level, they have already managed to start lowering the inflation.
Rick Riederhe global fixed income director of the company that manages assets for more than US$9 trillion, argued that there is a “reasonable possibility” that the United States Federal Reserve drive rates to 6%. He added that you may also need to keep them at that level. “for an extended period to slow down the economy and bring inflation down to around 2%”.
In the event that what they maintain from BlackRock happens, that is, interest rates go up to 6% in order to lower inflation and, in the event that investors fail to anticipate said scenario, the situation could affect financial markets.
His vision of the economy
Based on the last US unemployment data and price indexthe BlackRock executive also presented his perception of the economy and maintained that it is stronger than expected. He also explained the reasons for that resistance: “This is due, in part, to the fact that Today’s economy is no longer as sensitive to interest rates as it was in decades past.”. And he added that the resilience of the economy is a virtue and, at the same time, “complicates things for the Fed.”
To make his vision of the US economy clear, the BlackRock executive drew a striking comparison: “We compare the US economy to polyurethane”he said and stated that it is because it is a “remarkable material” that “shows flexibility and adaptability, but also durability and resistance.”
Source: Ambito
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