BlackRock's Rieder Pushes Fed for Rate Cut to 3% Amid Softening Labor Market
BlackRock CIO Rick Rieder has consistently called for the Federal Reserve to lower interest rates toward a 3% target, a stance he reiterated in a recent note in January 2026.
Rieder argues that rate cuts are necessary to stimulate economic activity, particularly in the housing market, and address a softening labor market.
Federal Funds Rate and Projections
The current effective federal funds rate stands in a target range of 3.50% to 3.75% as of January 2026, following several cuts in late 2025. Rieder's call for a 3% rate suggests a belief that further significant easing is needed beyond the central bank's current trajectory or projections.
Key Insights
Economic Rationale: Rieder contends that current higher rates disproportionately benefit cash-rich entities while the overall economy needs lower borrowing costs to grow faster than the national debt. He believes that at 3%, the situation could be reassessed based on economic data.
Inflation & Data: The current 5-year inflation break-evens are around 2.35%, and Rieder suggests a 3% funds rate would be appropriate in that context. He believes the Fed's decision-making is guided by underlying economic data, and a softening labor market is a key indicator for action.
Political Context: Rieder is reportedly among those being considered to succeed Jerome Powell as Fed Chair in May 2026, a role where his dovish stance aligns with the President's push for lower rates.
Market Expectations: The bond market currently expects two quarter-point cuts by the end of 2026, which would bring the rate target range to 3.00%-3.25%.