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‘Here To Stay’: These Asset Managers Say Markets Are Underestimating Inflation

Major asset managers are pushing back on the market’s expectation that inflation and U.S. interest rates have peaked and are unlikely to do significant further damage to the economy, a mistake markets made in early 2022, Bloomberg reported Tuesday.

Some of those issuing warnings include the world’s largest asset manager, BlackRock, Fidelity and French asset manager Carmignac, according to Bloomberg. Frederic Leroux, a member of Carmignac’s investment committee, told Bloomberg that markets are too optimistic that inflation will return to 2.5% by next year, citing worker shortages and the risk of energy shocks pushing inflation.

“Inflation is here to stay,” Leroux told Bloomberg. “After the crisis central bankers thought they could decide the level of interest rates. In the past two years they realized they don’t: inflation does.”

BlackRock anticipates that both inflation and interest rates will remain elevated, and although it doubts that the Federal Reserve would cut interest in a recession, it will at least slow the pace of rate hikes, according to Bloomberg. Leroux said that investor interest in the potential for the Fed to cut rates is “a sideshow,” and investors will have to wake up to the reality of persistent inflation.

“Central banks are unlikely to come to the rescue with rapid rate cuts in recessions they engineered to bring down inflation to policy targets. If anything, policy rates may stay higher for longer than the market is expecting,” wrote financial analysts at BlackRock’s Investment Institute, according to Bloomberg. Global Marco Director Jurrien Timmer of Fidelity Investments said that inflation remains a risk for the economy because the Fed has repeatedly stressed that it will not cut interest rates until inflation returns to 2% exactly, the Fed’s longtime target.

Some funds, such as Dutch asset manager Robeco, which manages roughly $250 billion, believe that inflation has peaked and that a recession would spur central banks like the Fed to cut interest rates, Bloomberg reported.

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One Comment

  1. Politicians in both parties no longer have any desire to balance the budget and have become addicted to the illogical and perverted new “monetary theory” that because the dollar is the world’s “reserve currency” we can endlessly print more money.

    We can watch in real time Europe collapsing and miles long gas lines after decades of their “Green New Deal” policies made them totally dependent on Russian gas and oil. In some places, energy costs have increased 1000% and businesses are closing because they can’t afford their utility bills. They’re clear cutting their forests, desperately digging for coal, and preparing for a brutal and dangerous winter. So even watching that unfold, then Biden and the Democrats pass their 730 billion dollar Green Energy bill, laughably called the “Inflation Reduction Act”, to institute all these proven failed policies here. It’s nothing but a Green New Deal slush fund that includes such insanity as 60 billion dollars for “environmental justice”.

    The Republicans are no better as McConnell and 12 RINO Republican Senators castrate their brothers in the incoming new House and pass the nearly two trillion dollar “Omnibus Spending Bill”, which is just another pork filled government money printing atrocity. A bill that continues the more than 100 billion dollars funding of the proxy war against Putin and gives never ending and unaccountable billions to the corrupt and decidedly “undemocratic” Ukraine government. Zelenskyy has shut down all but state controlled media, has shut down all Ukrainian Christian churches and jailed priests and gets a standing ovation as he demands more money from Congress while his wife is on a shopping spree in Paris, and Ukrainian oligarchs are buying mansions in Switzerland with our tax dollars.

    The same bill that has exactly zero dollars to protect our “sovereignty and territorial integrity”; while we have a completely open border that let’s in millions of unvaccinated illegals; including criminals, cartels, terrorists, and the Chinese made fentanyl that has killed more Americans than have been killed on both sides in the Ukrainian war. But there is plenty of money for more “Green New Deal ” nonsense and money for LGBQT museums and the “Michelle Obama Trail”, etc., ad nauseam.

    Americans need to wake up before it’s too late and realize that the middle class is being bankrupted by our own government’s never ending money printing (which is the main cause of inflation) and ever increasing taxes and higher and higher energy costs that will result from their idiotic “Green” policies and mandates. It’s worse than just that our Government is failing us. It’s abhorrent and disgusting that they obviously care more about criminals, fringe sexual deviants, Ukrainians and illegal immigrants than their own taxpaying, law abiding citizens.

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