Fed dampens hopes of interest rate cuts in March: BlackRock expert reassures - no disadvantages in a wait-and-see attitude.

Fed dampens hopes of interest rate cuts in March: BlackRock expert reassures - no disadvantages in a wait-and-see attitude.

According to a report by www.finanzen.net, the US Federal Reserve does not plan to cut interest rates in March, despite the hopes of many market participants. Fed Chairman Powell's wait-and-see attitude is based on the decision to wait for further inflation data. However, Rick Rieder, investment expert at BlackRock, sees little disadvantage in this wait-and-see attitude and expects the first key interest rate cut in May.

The US Federal Reserve has raised the key interest rate from near zero to 5.25 to 5.50 percent since March 2022 in order to combat historically high inflation. After eleven consecutive interest rate increases, inflation is again well below the 40-year high of 9.1 percent. The annual inflation rate was 3.4 percent in December 2023, close to the Fed's medium-term target of 2.0 percent.

It is assumed that the interest rate peak has been reached and many market participants were hoping for a rate cut at the next central bank meeting in March. However, Fed Chairman Jerome Powell has announced that a rate cut is unlikely any time soon. The Fed's reluctance can be attributed to the fact that GDP grew by a surprising 3.3 percent in the fourth quarter, thereby reducing the risk of a recession.

BlackRock's Rick Rieder supports the Fed's wait-and-see approach and sees "not many downsides" to the monetary authorities waiting patiently to cut interest rates given the current economic situation and inflation still above the Fed's target. He predicts a rate cut in May and emphasizes that the Federal Reserve is “not in a race to cut interest rates.”

This development shows that the US Federal Reserve is taking a cautious and data-driven approach to cutting interest rates to ensure economic stability. However, it remains to be seen how the economic data will develop in the coming months and whether the Fed will actually respond with a rate cut in May.