BlackRock Expects Fed Rate Cut in 2025

BlackRock Predicts Fed’s 25 bps Rate Cut by September 2025

Key Points:

  • The Federal Reserve is expected to cut rates.
  • BlackRock predicts a 25 basis points reduction.
  • Easing policy may boost digital and risk assets.

Lede: BlackRock, a global asset manager, expects the Federal Reserve to reduce rates by 25 basis points in September 2025, and potentially lower them further through 2026. The firm anticipates these adjustments based on economic and market conditions.

Nut Graph: This potential rate cut by the Federal Reserve could impact financial markets significantly, aligning with a broader strategy to support economic conditions. Investors and institutions might adjust their portfolios given the anticipated monetary policy shift.

BlackRock Insights

BlackRock, led by CIO Rick Rieder, anticipates the Federal Reserve will enact a 25 basis points rate cut in September 2025, with Rieder noting possible additional cuts by the end of the year. He attributes this outlook to softer labor markets and low inflation.

The expectations of a rate cut are noted to influence funding costs and market dynamics. BlackRock suggests clients reposition towards short-term bonds, select credits, and digital assets. These shifts aim to capitalize on favorable financial conditions.

Historically, rate cut cycles have benefited digital assets like BTC and ETH, as seen in prior easing cycles. These assets generally thrive on improved liquidity environments, reduced holding costs, and increased institutional attention.

In light of ongoing monetary shifts, potential financial impact includes rate-sensitive assets and market responses. This is expected to affect asset allocations and valuations, encouraging diversification into sectors poised for gains under lower rates.

I think they’re going to do nothing in terms of rate cuts at the conclusion of the Fed’s monetary policy meeting on Wednesday… But [I] anticipate that the central bank will lower its benchmark rate in September, with maybe two or three cuts by year-end.
– Rick Rieder, Chief Investment Officer of Global Fixed Income, BlackRock Source

The expectations around potential rate cuts reflect historical trends, suggesting positive outcomes for digital assets. BlackRock’s insights align with past performance data, indicating likely growth in digital currency markets if the Federal Reserve eases policy further.

Disclaimer:

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