BlackRock Strikes a Different Tone: The Fed Should Not Raise Rates, Warsh's Speech is Crucial

BlockBeats news, September 16: Gargi Pal Chaudhuri, BlackRock's Global Chief Investment and Portfolio Strategist, said the Federal Reserve should keep rates unchanged at this meeting, holding the benchmark rate in the 3.50% to 3.75% range. Although market pricing shows the probability of a 25 basis point hike has risen to 93%, she believes underlying U.S. inflation is cooling: August core CPI rose 0.3% month-over-month, while the year-over-year pace over the past 12 months slowed to 2.4% from 3.1% last year.

Chaudhuri said that if the Fed chooses to hike, the reason is not runaway inflation or unanchored inflation expectations, but rather rising oil prices increasing upside inflation risk. Compared with a 25 basis point rate move, investors should pay more attention to Fed Chair Kevin Warsh's post-meeting remarks, including the trigger threshold for the next hike, the impact of oil prices, and adjustments to the core PCE statistical methodology; the key question is whether oil prices have changed the Fed's policy reaction function.

On asset allocation, she believes the hedging effect of the traditional 60/40 stock-bond portfolio is weakening, and recommends allocating simultaneously to growth assets, income-producing assets, and low-correlation assets. On equities, investors can focus on AI infrastructure, companies that already have commercialization capability, and defensive high-quality assets; regionally, she is more bullish on Asian emerging markets, and recommends using current higher yields to allocate to fixed-income assets at the front end and belly of the yield curve.