“The Fed has signaled that it will aggressively raise interest rates this year, but that sounds unrealistic. Being aware of the economic slowdown, we will eventually slow the rate of hikes.”
Jean Beauvin, head of the Investment Research Institute (pictured) of BlackRock, the world’s largest asset management company, recently predicted this in a video interview with the Korea Economic Daily. He is responsible for overseeing the research activities of BlackRock, which is worth $9.5 trillion in assets under management (AUM), and establishing response strategies.
“The Fed’s announcement that stimulus measures are no longer needed is a welcome move,” Beauvin said. As such, it is not expected to tighten austerity as quickly as it was announced at last week’s Federal Open Market Committee (FOMC) meeting. This is a different view from many Wall Street analysts who say that the rate will be raised by 50bps (1bp = 0.01% points) several times.
Beauvin predicted that US Treasury bond yields could jump sharply in line with the balance sheet contraction in May. “As interest rate hikes and quantitative tightening proceed at the same time, long-term interest rates will rise faster,” he said. This means that there will be no reversal of long-term and short-term bond yields, which is considered a harbinger of an economic downturn.
He also expressed optimism about the US economy. “The possibility of the US falling into stagflation is very low,” said Bobin.
It will take some time for the service sector to recover to pre-pandemic levels. In other words, there is still a lot of room for further growth in the economy. “As the global energy supply crisis is spreading, a blow is inevitable to some extent, but the US economy is basically prepared for a shock,” said Beauvin. situation,” he said. “Unlike the US, stagflation is likely to become a reality in Europe,” he said.
The European Central Bank (ECB) is expected to further lower its growth forecast for this year. The likelihood that the ECB will raise the benchmark interest rate within the year is half and half.
“I have a positive outlook for the New York stock market this year,” said Bobin. Volatility is expected to increase between inflation caused by supply chain disruption and the Fed’s normalization of interest rates.
What industries and sectors should Korean investors invest in? Director Bobin picked climate change-related stocks first. “The cut off of Russian oil and natural gas has sparked interest in alternative resources,” he said. He said, “We are increasing the proportion of investment in Asian markets such as Korea and China, which are expected to perform well this year.”
New York = Correspondent Jo Jae-gil
■ Director Jean Beauvin said…
▲ Vice President, Central Bank of Canada
▲ Assistant Secretary of the Treasury of Canada
▲G7·G20·Financial Stability Committee Canada representative
▲Professor at Columbia University Business School
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