BlackRock’s Rieder Predicts Shock September Rate Cut as Inflation Stubbornly Lingers
Wall Street braces for a curveball as BlackRock’s bond chief Rick Rieder flags a potential Fed pivot—despite inflation’s death grip.
The Hawkish Retreat?
Markets are pricing in rate cuts by year-end, but Rieder’s betting the Fed moves sooner. Much sooner. September’s now in play as economic cracks widen.
Inflation’s Last Stand
CPI data’s still hotter than Powell’s comfort zone, but the bond king sees weakening employment and consumption trends forcing the Fed’s hand. Classic ‘tighten until something breaks’ scenario.
Crypto’s Rate-Cut Rocket Fuel
Risk assets would scream higher on dovish surprises—Bitcoin’s already sniffing blood in the water. Traders stacking leveraged longs ahead of what could be 2025’s biggest macro catalyst.
The Punchline
Nothing solves inflation like… cutting rates into inflation? Wall Street’s Stockholm syndrome with easy money continues. Place your bets—the Fed Put’s back in vogue.
Tariff Impact And Fed Outlook Shape September Rate Cut Expectations
Inflation Data Shows Contained Price Pressures
Recent inflation figures reveal a modest uptick that has been largely managed by corporate strategies at the time of writing. Core CPI rose 0.23% month-over-month and 2.93% year-over-year in June, while headline inflation reached 0.29% monthly and 2.67% annually. The Tariff’s impact on inflation has been more muted than expected, and this supports the case for a September rate cut.
Companies prepared early for potential disruptions, adjusting supply chains and also managing inventories proactively. This strategic approach has helped maintain price stability even as trade tensions persist. BlackRock’s economic forecast takes these corporate responses into account when assessing the likelihood of a September rate cut.
Rieder noted that the overall trend remains one of moderation, which is encouraging for the Federal Reserve outlook. The contained inflation pressures create conditions that could support rate reductions later this year.
Corporate Strategies Limit Price Pass-Through
The corporate sector’s response has been particularly noteworthy, with many companies absorbing increased costs rather than passing them to consumers. This approach has been driven by competitive considerations and also by companies’ desire to maintain market share.
Rieder stated:
Supply chain adjustments made earlier in the year have helped companies navigate the current environment more effectively. The US inflation trends reflect these corporate strategies, which have played a significant role in keeping price pressures contained and supporting the potential for a September rate cut.
Labor Market Supports Fed Policy Shift
The current situation in the labor markets has also affected the current inflation situation and the indications are that the wage pressures will subside. This has been of special interest to the Federal Reserve outlook, as another variable being tracked closely is the rate of wage growth which helps to gauge future price pressure issues.
Wage growth has slowed down steadily and this slowdown has supported the disinflationary trend. Employment figures show that the employment market remains fairly robust but wage growth rates have decelerated compared to previously sustained high levels. These conditions align with BlackRock’s economic forecast that suggests conditions favor a rate cut in September.
The tariff impact on inflation and easing labor market conditions create a policy stance that supports rate cuts. The US inflation trends and corporate responses may aid this timeline, as they have established consequential conditions that policymakers will continue monitoring through data review.
According to the Federal Reserve outlook, September is increasingly becoming the more likely time to expect the first rate decrease and the first cut may be less likely in July as the Fed has noted its intend to evaluate short-run developments.
