TLDR
- BlackRock CIO Rick Rieder has urged the Federal Reserve to cut interest rates before the upcoming FOMC Meeting.
- He believes a rate cut would lower housing prices and help reduce inflation while supporting economic stability.
- Rieder stated that high interest rates are discouraging refinancing and home construction across the United States.
- Despite strong economic data, Rieder argues that the Federal Reserve still has room to cut rates responsibly.
- The CME FedWatch Tool indicates a 95.9% chance that interest rates will remain unchanged after the FOMC Meeting.
With the FOMC Meeting only four days away, BlackRock’s Chief Investment Officer Rick Rieder has pushed for a rate cut. Rieder believes a rate reduction would ease pressure on borrowers, lower housing prices, and help curb inflation. His call adds momentum to growing demands on the Federal Reserve to adjust its monetary stance.
Housing Market Faces Pressure as Rates Remain Elevated
Rieder emphasized that the housing sector is under significant strain due to the current rate environment. Elevated interest rates have made refinancing unattractive, reducing the appeal of new home construction and slowing sales. Consequently, affordability has worsened, limiting options for first-time buyers and putting pressure on builders.
He stated that lowering rates could ease borrowing costs and help stabilize housing prices. This, in turn, may boost housing supply by encouraging construction and easing constraints on developers. By stimulating demand and supply together, the market could regain balance while helping reduce inflationary pressure.
Though economic growth indicators remain strong, housing remains one of the most vulnerable sectors under current policy. High borrowing costs have dampened sentiment across real estate markets and tightened credit availability. A shift in policy direction at the upcoming FOMC Meeting may offer partial relief if the Federal Reserve adjusts its stance.
Rieder Suggests Room Exists for Immediate Rate Adjustment
Despite recent strong labor reports, Rieder argues the Fed still has room to cut interest rates without spurring inflation. He noted that a cut to 3.25% would remain above present inflation levels, preserving a restrictive stance. The CIO emphasized that easing rates can yield economic benefits without undermining inflation control.
While some policymakers remain cautious, Rieder’s comments signal growing pressure on Jerome Powell’s leadership. The Federal Reserve continues to prioritize inflation, but the FOMC Meeting could provide an opportunity to reassess strategy. Market participants are closely monitoring signals from the central bank and awaiting formal guidance.
Additionally, market tools reflect skepticism about immediate action. The CME FedWatch Tool shows a 95.9% probability that rates will remain steady after the FOMC Meeting. Only 4.1% of forecasts favor a cut to the 400–425 bps range.
Political and Legal Pressure Mounts as FOMC Meeting Approaches
Fed Chair Jerome Powell is facing intensified scrutiny ahead of the FOMC Meeting due to external political and legal developments. U.S. Representative Anna Paulina Luna referred Powell to the Department of Justice over alleged false Senate testimony. This referral cites two separate occasions, potentially complicating Powell’s position before the July session.
Political figures, including President Donald Trump, have criticized Powell for maintaining high rates amid economic concerns. Trump has long argued that such policies restrict growth and delay recovery across several industries. His previous remarks blamed Powell for deepening economic strains by refusing to pivot on interest rates.
Amid these developments, policymakers like Christopher Waller and Mary Daly have hinted at possible rate cuts in 2025. However, any immediate decision remains unlikely, especially given market expectations ahead of the FOMC Meeting. Nevertheless, pressure from multiple sides may influence future policy directions.
