BlackRock says there's a good chance the Fed will have to hike interest rates to 6%, the highest level in 20 years
Inflation is stubbornly higher than the Federal Reserve wants, and that means it could push interest rates to a 20-year high of 6% — and not just for short while, according to a BlackRock investment chief.
His remarks came after Jerome Powell's testimony to Congress on Tuesday, where the Fed chair signaled the central bank was ready to ramp up the pace of rate hikes. That raised expectations for a 50-basis-point increase in March, whichThe Fed has lifted rates from near zero last March to as much as 4.75% today, in a bid to bring inflation down to its target 2% rate. Inflation hit a 40-year high of 9.1% in June, and was still far above target at 6.4% in January.
"So, while we're quite confident that last year's elevated inflation peak won't be exceeded, the possibility of inflation remaining stickier for longer does suggest that the Fed will have to keep hiking rates for longer than previously thought," he said.
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