Key Takeaways
BlackRock’s Rick Rieder pushes for rate cuts as the crypto industry and housing sector strain under Fed policy. With ETH ETF inflows surging past BTC, all eyes now turn to the upcoming FOMC decision.
With just four days to go before the Federal Reserve’s next FOMC meeting, the debate around interest rates is heating up, drawing in voices from both Wall Street and the crypto industry.
This time, it’s not just crypto-native investors calling for rate relief. BlackRock’s Chief Investment Officer, Rick Rieder, has entered the conversation.
BlackRock CIO urges rate cuts
In a recent interview with Bloomberg, Rieder urged the Fed to begin slashing interest rates. He argued that the broader U.S. economy and particularly the service sector would benefit from such a shift.
That said, markets have heard this tune before.
Earlier this month, traders piled into Bitcoin [BTC] ahead of a strong U.S. jobs report, hoping the Fed would finally pivot—only to be met with data that reaffirmed its hawkish stance.
As previously reported, that macro surprise cooled crypto momentum and reminded investors that the Fed’s next move remains tightly tethered to real-world labor and inflation numbers.
Rieder’s comments contrast with prevailing sentiment on Wall Street, where many still favor a cautious or minimal easing approach.
For the crypto sector, however, Rieder’s remarks could serve as a critical point of validation, as lower interest rates historically fuel investor appetite for risk assets like Bitcoin.
He said,
“The service economy is what drives this economy today. It’s not a goods-oriented economy, not commodities, not exports, not manufacturing.”
Why does he think it would be beneficial?
Further in the interview, Rick Rieder emphasized that the Fed’s current approach to inflation may no longer be effective in today’s service-dominated economy.
According to the BlackRock executive, aggressive rate hikes are now doing more harm than good, particularly in sectors like housing, where the impact is most pronounced.
“The real impact of interest rates on the economy today… it’s about housing.”
These individuals, he noted, are the ones most reliant on credit and now face increasing barriers to home ownership.
Rieder argued that easing rates could spur more housing construction and improve affordability, ultimately benefiting the broader economy.
He added,
“If we get the rate down, you actually can bring home prices down. You build more houses, you’ll actually reduce inflation.”
This shows that his stance not only challenges the Fed’s current policy direction but also adds weight to the growing call, especially from within the crypto industry.
However, despite the Fed’s continued concerns about inflation, BlackRock’s Rieder pointed out that even a rate cut to 3.25% would remain above current inflation levels.
ETH ETFs take the spotlight as rate hopes dim
Still, optimism for an imminent Fed rate cut remains low.
According to the CME FedWatch Tool, there’s a 95.9% probability that interest rates will remain unchanged after July’s FOMC meeting, with only a slim 4.1% chance of a cut.
Meanwhile, Ethereum [ETH] ETFs have outpaced Bitcoin [BTC] in inflows, with ETH seeing $1.85 billion in net inflows between 21 and 25 July, compared to just $72 million for BTC.
With so many crosscurrents shaping the market, all eyes are now on the FOMC meeting and its potential ripple effects across the crypto landscape.
