Blackrock spoke after the expectations of interest rate reduction in the US: Is the expected future? Surprise Comment!

Global asset manager BlackRock, He warned that the financial markets priced the Fed’s price reduction and underestimated the ongoing threat of inflation. In a recent report, the company said that the expectation of an interest rate reduction of four to five basis points this year seems to be excessive.

“We believe that markets ignore inflationary pressures caused by new customs tariffs and globally loose financial policies,“ and added: “It is likely that these factors will keep global borrowing costs higher than the Pandemia.”

The company pointed out the wave of new customs duties in the US and the retaliation measures expected from other countries and argued that these developments will strengthen the high interest environment in the predictable future.

Especially as trade tensions climb, economic uncertainty increases. President Donald Trump’s aggressive customs duties policies fired the fears of recession and triggered further financial relaxation expectations. However, some analysts warn that the Fed can recoil quickly.

JPMorgan economists, compared to the previous 1.3 %growth forecast this year, the GDP foresee a shrinkage of 0.3 %in GDP, sharply revised their appearance downward.

Despite increasing concerns, the Trump administration did not sign that he would step back from his protective attitude. On Monday, Trump reiterated his belief that economic challenges were a necessary step to re -balance commercial relations, although the latest market turmoil has erased and sweeps the value of $ 6 trillion.

Bankrate’s Chief Financial Analyst Greg McBride warned that an early emergency interest rate reduction could worse the instability in the market.

McBride said in a note, “The financial system has very little that the FED can do or do, unless the financial system shows signs of serious dysfunction such as a deterioration in the flow of credit, and added:“ An sudden interest rate reduction may fueled the panic. ”

*It is not an investment advice.