Investors Expect Aggressive Fed Cuts. BlackRock and Barclays Say They’re Wrong.

The Federal Reserve is poised to raise interest rates again this week, but investors are betting that the central bank will soon pivot to cutting rates.

That's according to a recent survey by Bank of America, which found that 75% of investors expect the Fed to cut rates by the end of 2023.

Some investors are even betting that the Fed will cut rates as soon as next year.

But two of the world's largest asset managers, BlackRock and Barclays, are warning that investors are making a mistake.

BlackRock's chief investment officer, Rick Rieder, said in a recent interview that he doesn't expect the Fed to cut rates until 2024 at the earliest.

Barclays' chief economist, Michael Gapen, agreed, saying that the Fed is likely to keep rates on hold for an extended period of time.

Both Rieder and Gapen argue that the Fed needs to keep rates high to bring inflation under control.

Inflation is currently running at a 40-year high, and the Fed has said that it will not stop raising rates until inflation falls to its target of 2%.

Rieder and Gapen also argue that the Fed cannot afford to cut rates too soon, as that could lead to a resurgence of inflation.

If Rieder and Gapen are right, investors who are betting on a Fed rate cut could be in for a rude awakening.

The Fed has made it clear that it is committed to bringing inflation under control, and it is likely to keep rates high for as long as it takes.

Investors who are expecting a Fed rate cut anytime soon should be prepared for disappointment.