Rieder’s Fed Chair Odds Rise as BlackRock CIO Calls for 3% Rates

BlackRock CIO, Rick Rieder, viewed as a potential successor to Fed chair Jerome Powell, renewed his call for U.S. interest rates to fall to 3%. He is scheduled to be interviewed by President Donald Trump on Thursday as attention grows around the next Fed leadership choice.

Rieder’s Fed Chair Odds Hit 9% as He Pushes 3% Rate Target

Kalshi, a prediction market, now shows Rieder with 9% odds of becoming Trump’s nominee for Fed chair. The odds reflect trader expectations rather than an official signal. No nomination decision has been announced.

In an interview with CNBC, Rieder said he has been making the case for months that borrowing rates should go down. He said a 3% rate would move policy closer to equilibrium and keep conditions stable without overstimulating demand.

The current policy rate is higher than that target. The Fed rate target is in a range between 3.5% and 3.75% after fed officials delivered a quarter-point cut in December. A push to 3% would entail at least 50 more basis points of cuts from the current range.

Rieder said the Fed still has space to cut. He said rates don’t have to fall drastically, just head toward 3%. Rieder maintained that lower rates would relieve credit stress and help in maintaining market liquidity.

BlackRock CIO described equilibrium as the point at which borrowing costs are neutral, neither stimulative nor restrictive. It is commonly applied to a level of policy that assumes some growth. Rieder said the Fed should begin to nudge policy more in that direction.

Fed Decisions Expected to Follow Data, Not Politics

Rieder also addressed concerns that politics were influencing monetary policy. He added that he is unfazed by Fed independence. He added that whoever is in the Fed chair’s seat will weigh the data and decide on economic signals.

Rate decisions are still the providence of the Federal Open Market Committee, he added. The institution is honest and it’s real that they stand by their mission, he said. His remarks were designed to boost confidence in the Fed’s framework for making decisions.

Trump has repeatedly called for the Fed chair to reduce rates more aggressively. As CoinGape reported that Trump refers inflation numbers as a positive sign and demands further Fed rate cuts. He cautioned that delays could falter growth and leave borrowing costs too high.