BlackRock CIO: "Fed Must Immediately Halt Quantitative Easing"

Rick Rieder, Chief Investment Officer (CIO) of BlackRock Fixed Income
[Photo by Bloomberg]

[Asia Economy Reporter Park Byung-hee] BlackRock, the world's largest asset management firm, has argued that the Federal Reserve (Fed) should immediately halt its quantitative easing policy.

According to Bloomberg on the 10th (local time), Rick Rieder, Chief Investment Officer (CIO) of BlackRock's fixed income division, made this claim in a report released after reviewing the U.S. Consumer Price Index (CPI) for January.

The U.S. January CPI inflation rate recorded 7.5%, breaking a 40-year high once again. This increase was larger than December's 7.0% and exceeded Wall Street economists' forecast of 7.3%.

Due to high inflation, concerns about the Fed's early tightening resurfaced, causing the New York stock market to plunge, with the S&P 500 index falling 1.81% that day. There were growing voices that the Fed would raise the benchmark interest rate by 0.5 percentage points at the March monetary policy meeting and accelerate the start of quantitative tightening.

However, the reality remains that the Fed is still increasing financial market liquidity through quantitative easing. Although the Fed has advanced the end date of quantitative easing, that end date is March. As a result, the Fed's holdings continue to grow. As of the 31st of last month, the Fed's holdings amounted to $8.8732 trillion, an increase of about $13 billion from the previous week.

CIO Rieder stated, "The Fed is still increasing financial market liquidity through quantitative easing and plans to continue this until mid-March," adding, "The Fed must immediately stop quantitative easing to address the current high inflation problem."

CIO Rieder praised, "So far, the Fed's response to the COVID-19 pandemic has been heroic," and emphasized, "Now is the time to quickly shift the policy stance to neutral." However, he added that while monetary policy should be changed rapidly, excessive tightening should be avoided as it could impact the economy and financial markets.

This content was produced with the assistance of AI translation services.