The market is wrong to expect Fed rate cuts anytime soon as inflation will persist, Blackstone president says
Despite what markets may currently signal, the Federal Reserve is unlikely to start easing interest rates anytime in the near future, Blackstone President Jonathan Gray said.the Financial Times"The Fed is likely to pause or maybe go 25 basis points higher from here, but I think they're unlikely to pivot as quickly as the market is expecting," Gray said.
Policymakers will meet May 2-3, and markets widely expect a quarter-point hike to 5%-5.25% with odds pointing to rate cuts later in the year, according toBut Gray predicted the Fed would"hold rates at an elevated level for an extended period of time" to snuff out lingering inflationary pressure, according to the FT.report showed a 5.2% increase — still considerably higher than the Fed's 2% goal.
Gray also acknowledged that higher rates could add stress on the banking industry, which has seen deposits flee regional lenders in the wake of Silicon Valley Bank's collapse in March., have warned that high interest may create more instability, Gray thinks that worries of an industry-wide collapse are unwarranted:
"It's possible we could see further incidents, but I don't think there's a systemic problem because we don't have a systemic credit problem," he told the FT.
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