--- title: "The era of Wosh has arrived! As the market bets on interest rate hikes, BlackRock shouts \"Rate cuts are justified\"" type: "News" locale: "en" url: "https://longbridge.com/en/news/287519384.md" description: "The era of Wosh has arrived! As the market bets on interest rate hikes, BlackRock shouts \"Rate cuts make sense.\"" datetime: "2026-05-25T09:58:44.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287519384.md) - [en](https://longbridge.com/en/news/287519384.md) - [zh-HK](https://longbridge.com/zh-HK/news/287519384.md) --- # The era of Wosh has arrived! As the market bets on interest rate hikes, BlackRock shouts "Rate cuts are justified" As Jerome Powell officially took office as the Chairman of the Federal Reserve last Friday, the market was pricing in the possibility of interest rate hikes by the Federal Reserve this year, but BlackRock offered a different assessment. Navin Saigal, the Global Head of Fixed Income for Asia Pacific at BlackRock, stated in an interview, **"Under Powell's leadership, the Federal Reserve has reasons to shift towards easing."** When asked about the possibility of rate hikes, Saigal bluntly said, "If you force me to choose between raising and lowering rates, I actually think there are enough factors supporting a rate cut." He further pointed out, **"The labor market may come under pressure, so the policy options are more likely to be to hold steady or shift towards a rate cut."** This view is clearly at odds with the current mainstream expectations in the bond market. Investors are generally betting that Powell will prioritize maintaining the Federal Reserve's credibility in curbing inflation rather than responding to President Trump's preference for low interest rates. Trader pricing shows that the Federal Reserve is almost certain to initiate a rate hike cycle before December, marking a significant reversal from the market's expectations three months ago for a substantial rate cut. ## **Inflation Pressure and Rising Yields** The turmoil in the Middle East, particularly the conflict with Iran, has driven up fuel and commodity prices, continuously raising inflation expectations. This change has directly reinforced the market's bets on interest rate hikes. As one of the most sensitive indicators to policy, the two-year U.S. Treasury yield has risen from a low of 3.36% in March to 4.12% last Friday, briefly touching 4.14% during fluctuations, reaching a high not seen in over a year, and exceeding the upper limit of the federal funds rate range by nearly 40 basis points. Meanwhile, the thirty-year U.S. Treasury yield briefly rose to 5.2% last week, a rare level since 2007, before retreating to 5.06%. The shift in market expectations, combined with the resilience of the U.S. economy and the stock market rally driven by artificial intelligence investment, has heightened investor concerns that inflation may remain above the Federal Reserve's 2% target for some time. ## **Economic Structural Changes and Policy Uncertainty** Saigal analyzed that **"Although AI-related investments support the economy, the underlying logic is to replace human labor with technology, which may put pressure on the labor market in the future."** He stated, **"In the next year or so, if the economy lacks clear signals, the safest approach may be to stay put."** At the same time, the internal stance of the Federal Reserve is also changing. Governor Christopher Waller, appointed by Trump, previously advocated for rate cuts to protect jobs, but he stated last Friday that the next policy move could also be a rate hike. Officials such as Vice Chairman Jefferson and New York Fed President Williams will also speak this week to further signal policy direction. Trump has expressed hope that Powell can lead the Federal Reserve independently, despite having publicly called for lower borrowing costs multiple times. Changes in interest rate expectations have begun to affect investment allocations. As yields rise and gradually incorporate the prospect of rate hikes, some institutional investors, including Capital Group portfolio manager Chitrang Purani, have started to favor short-term U.S. Treasuries However, **Purani believes that the threshold for tightening policies remains relatively high**. He stated, "I do believe that the threshold for interest rate hikes is still quite high because **this Federal Reserve and Waller may want to be a bit more patient before taking the next step to fully understand how inflation is transmitting to the labor market and financial conditions**." He added that **under Waller's leadership, the Federal Reserve's response to economic data is not expected to change significantly.** In addition to policy signals, the market will also focus on the auction results of two-year, five-year, and seven-year U.S. Treasury bonds this week to gauge changes in investor demand and interest rate path expectations ### Related Stocks - [BLK.US](https://longbridge.com/en/quote/BLK.US.md) - [BTX.US](https://longbridge.com/en/quote/BTX.US.md) - [BIT.RT*.US](https://longbridge.com/en/quote/BIT.RT*.US.md) - [BDJ.US](https://longbridge.com/en/quote/BDJ.US.md) - [BSTZ.US](https://longbridge.com/en/quote/BSTZ.US.md) - [BIT.RT.US](https://longbridge.com/en/quote/BIT.RT.US.md) ## Related News & Research - [BlackRock's Fink predicts emergence of computing power futures](https://longbridge.com/en/news/285242177.md) - [If You Invested $100 In BlackRock Stock 20 Years Ago, You Would Have This Much Today](https://longbridge.com/en/news/282898926.md) - [Can Kevin Warsh tighten policy without crossing Trump?](https://longbridge.com/en/news/287535300.md) - [Berenberg's chief economist says ECB rate hikes would add to economic misery](https://longbridge.com/en/news/287335310.md) - [Top Economist Says Trump's Softer Tone On Kevin Warsh Suggests Explosive Powell Rift Was 'Personal,' Not Structural To The Fed](https://longbridge.com/en/news/287215873.md)