US Fed chair candidate Rieder says Powell was more hawkish than expected
The Fed cut the interest rate by a quarter of a percentage point
RICK Rieder, an asset manager on the short list of possible candidates to be the next chair of the Federal Reserve, said on Wednesday he feels interest-rate cuts are in line with a “clearly slowing” labour market and that Fed Chair Jerome Powell was “considerably more hawkish than expected” in his post-meeting news conference.
“We believe there is an increased chance that December’s meeting may skip a cut, which would push off further accommodative rate moves into the new year, and potentially to a new Chair,” wrote Rieder, who is chief investment officer of global fixed income at BlackRock.
“Moving interest rates lower, however, is very much in line with what we do know today, which is that the labour market is clearly slowing, to the point of potential stall-speed.”
The Fed cut the policy rate by a quarter of a percentage point to a range of 3.75 per cent to 4.00 per cent at the end of its two-day meeting and Powell said that another rate cut in December is “not a foregone conclusion,” a phrase that many other analysts also equated to a signal for a possible pause.
But Rieder’s remarks were notable in that he is one of five on Treasury Secretary Scott Bessent’s shortlist of potential successors to Powell when his term ends mid-May.
Bessent said he would present a final slate of candidates after Thanksgiving to President Donald Trump, who says he will make a decision by the end of the year.
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Trump has made it clear he wants a Fed chair who will pursue sharply lower rates, as he has called for all year.
“We are tangibly witnessing a labour slowdown alongside a series of productivity enhancements. Moreover, we’re witnessing system-wide bifurcations in wealth and income prosperity, and a tangible need for increased housing velocity and affordability improvement,” Rieder wrote on Wednesday. “Hence, we think the Fed is right in lowering interest rates again, and we anticipate a continuation of this trend over coming Fed meetings.”
National Economic Council Director Kevin Hassett is seen as the lead candidate for Powell’s job, based on betting in online markets Kalshi and Polymarket.
Fed Governor Christopher Waller and former Fed Governor Kevin Warsh are seen as next-most likely, with Rieder trailing at around an 8 per cent to 9 per cent probability. REUTERS
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