It is highly likely that the Fed will reduce rates by 50 basis points: the BlackRock Executive

It's quite possible that the US Federal Reserve will cut interest rates by 50 basis points at its next meeting, according to Rick Rieder, CIO of BlackRock Fixed World Income.

<p class = "canvas-canvas-text canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Rieder told Yahoo Finance & nbsp;Moving& nbsp; most analysts expect a 25 basis point reduction in interest rates when the FOMC meets at the end of the month. Data-reactid = "18"> Rieder told Yahoo Finance that most analysts expect a 25 basis point reduction in interest rates when the FOMC meets at the end of the month, but he said that to make a difference, the Fed should consider a more aggressive rate cut.

"When you reduce the rates, you really want to shock the system," he said. "If the Fed means we're going to promote global expansion or pursue it in the US, then we can probably go up to 50 and say, you know what, we've done what we have to do."

Last week, Fed Chairman Jay Powell testified before Congress and said: "Based on the incoming data and other developments, it appears that the uncertainties surrounding trade tensions and concerns about the strength of the global economy continue to weigh on the US economic outlook. "

Powell's testimony is one of the reasons why Rieder expects a rate cut even though he is not sure the Fed needs to do so because the US economy is doing pretty well – unemployment is low and the United States remains below the target of inflation.

But "when you think about what is happening in the rest of the world, the Fed must now almost implement an interest rate policy for the rest of the world, because the other central banks are short of tools", did he declare.

With interest rates in the United States still in the range of 2.25% to 2.50%, Rieder said it was possible to reduce. Rieder said the cut in interest rates would not threaten the Fed if the US economy weakened. He added that the Fed could once again buy assets and develop its balance sheet.

"We explained that with the problem of the central bank, especially that of the Fed, keep the rates at around 2% and hold them for a long time," he said.

Rieder said maintaining stable rates in the US for a long time would have a positive effect on the economy because companies could make long-term financial decisions.

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