BlackRock says markets are expecting too many interest rate hikes, stays bullish on stocks
BlackRockhas said central banks are likely to raise interest ratesless sharply than investors expect.
- Traders are expecting five rate hikes from the Fed this year as it grapples with soaring
Investors are expecting too many interest rate hikes from global central banks, BlackRock has said, with the real outcome likely to be more "dovish" than many anticipate.
"We believe central banks are talking tough but ultimately will acknowledge that fighting inflation by aggressively hiking will come at too high a cost to growth," analysts at the $10 trillion asset manager's investment institute said in a note Monday.
"This is why we see the eventual policy response as muted," the analysts, led by Jean Boivin, said.
BlackRock said it thinks
Investors now think the US
Traders dialed up their expectations after strong jobs data, released Friday, suggested the Fed may be facing stronger growth and inflation than previously thought.
Central banks around the world are turning off the stimulus taps as they grapple with the strongest inflation in decades. It's caused volatility in stocks, with the S&P 500 down around 5% for the year.
Central banks may say they're getting tough on inflation, but really they're just planning to return interest rates to levels that would still be low by historical standards, BlackRock's analysts said.
The tough talk is causing
"We keep our modest overweight on equities because of the still-low sum total of expected policy rate hikes, but are bracing for bouts of volatility along the way," the analysts wrote.
"We see this creating opportunities for those with long investment horizons after a tough start for risk assets this year."
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