BlackRock CIO Rick Rieder is calling on the Federal Reserve to begin cutting interest rates immediately. He argues that current high rates are hurting lower-income Americans and worsening inflation through housing constraints.
According to Rieder, the Fed’s policy is “doing real harm” to working-class Americans. High interest rates have made homebuilding more expensive, worsening the housing shortage and pushing prices higher. For him, this is a major flaw in the Fed’s current strategy. He believes that cutting rates could stimulate construction, ease housing pressure and help bring inflation down by improving supply, rather than just suppressing demand.
Rieder noted that the U.S. economy is now service-driven, unlike in past decades when manufacturing dominated. In this new reality, aggressive rate hikes have diminishing returns and hit vulnerable populations harder. He also criticized the Fed’s reliance on lagging data, saying policymakers are reacting too late to changing conditions.
In his view, inflation expectations are already anchored between 2.5% and 2.75%. That gives the Fed room to lower the current rate to around 3.25%, still staying above inflation but reducing stress on the housing and credit markets. Rieder’s team at BlackRock, which manages over $3 trillion in fixed income, is already positioning for this. They’re favoring shorter-duration bonds, high-quality credit, and select European assets expecting more rate cuts ahead.
As the Fed prepares for its next policy meeting, Rieder’s message is clear: delaying action could deepen inequality and slow progress. Whether Jerome Powell agrees remains to be seen.
Sources: Wall Street Journal, Barron’s, Reuters, AInvest, Mitrade
