09-07-2022, 11:02 AM
Quote:Federal Reserve policy makers are about to surprise themselves — and not in a good way when it comes to stocks and other assets perceived as risky, according to analysts at BlackRock Investment Institute. BlackRock has argued that investors are dealing with a “regime shift” as the COVID-19 pandemic upended an unusual period of mild volatility in output and inflation, heralding a more volatile market environment that carries echoes of the early 1980s.
That’s an environment in which record debt levels mean small changes in interest rates will have an outsize impact on governments, households and companies, the research arm of the world’s largest asset manager has argued. “Central bankers at the recent Jackson Hole forum started to recognize this reality. But we think they’re not prioritizing economic implications over pressure to curb inflation,” the analysts said in a Tuesday note, referring to the late August monetary policy symposium held in Jackson Hole, Wyoming. Bad news for stocks: Fed will be surprised how hard rate hikes hit economy, says BlackRock