BlackRock’s Rieder Says Fed Could Be Forced to Adjust Policy

Tame inflation data for February, reflecting an environment of stable price pressures, is likely to give way to elevated readings on the back of strong economic growth. A ramp-up in U.S. activity is one of the factors that may eventually push the Federal Reserve to adjust its low-rate policy.

That’s the view of BlackRock Inc.’s Rick Rieder. “We’re witnessing the end of a period of disinflation in many places, and the re-rating of growth and prices to impressively higher levels,” the chief investment officer of global fixed income wrote in a note after Wednesday’s release of consumer-price data. “Without another severe Covid-driven double dip, it is hard to bet that the roughly 60% chance of one Fed policy rate hike by 2023 implied by market pricing is too high.”