The Federal Reserve is almost certain to raise interest rates again when it meets Wednesday afternoon — probably by three-quarters of a percentage point for the second straight meeting.
But all bets are off after that. One Wall Street strategist thinks that smaller rate hikes are likely later this year, and that the Fed may even be ready to hit pause soon.
“I think we’ve seen the brunt of big moves in interest rates,” Rick Rieder, chief investment officer of global fixed income for BlackRock (BLK), told Alison Kosik on CNN’s “Markets Now” Wednesday. “The economy is starting to slow significantly.”
That may be true. But inflation is still a major problem, and as long as that remains the case, the Fed may need to keep aggressively raising rates.
Danielle DiMartino Booth, CEO and chief strategist with Quill Intelligence, told Kosik that she thinks any expectation that the Fed will pull back on its pace of rate hikes is “misguided.”
“Powell will channel his inner Paul Volcker,” DiMartino Booth said, referring to how the former Fed chair, who led the central bank in the late 1970s, needed to raise rates sharply to fight rampant inflation. She said Powell still needs to be “resolute” about bringing down prices.
DiMartino Booth noted that the economy is clearly softening and that investors shouldn’t get caught up in the semantics debate about whether we’re in a recession — no matter what the second-quarter gross domestic product numbers show Thursday. She added that recent weakness in housing data is a sign of a slowdown.