BlackRock Pushes for 50-Basis-Point Fed Rate Cut in September

Investors are increasingly positioning for a Federal Reserve rate cut in September, with BlackRock Research suggesting there is a rational basis for a 50 basis point reduction. The firm’s outlook stands out among market expectations, which have largely priced in a smaller 25 basis point cut. Recent movements in Treasury markets and swap contracts indicate growing confidence in the likelihood of easing, with the probability of a September cut rising to 90% following the release of July inflation data [1].

Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, noted that while the latest inflation numbers were slightly higher than the previous months, they remain below levels of concern. This, he argued, provides a solid foundation for the Fed to begin cutting rates in September [1]. His comments have added momentum to a market that has been gradually adjusting its expectations for a rate cut, as evidenced by the rising probability of a 25 basis point reduction over the past month [3].

The market’s increased confidence is reflected in the surge of option premiums related to the secured overnight financing rate (SOFR), with traders adding roughly $2 million to positions that would benefit from a larger-than-expected rate cut [1]. This suggests a growing appetite for more aggressive easing, even as the Fed remains cautious in its public statements.

While BlackRock is advocating for a 50 basis point move, other analysts have taken a more conservative stance. Marco Santarelli of Norada Real Estate has stated that a 25 basis point cut at the September meeting is the most likely scenario, though the final decision will depend on the latest economic data [2]. The difference in forecasts underscores the uncertainty that remains about the Fed’s next steps.

An aggressive rate cut, should it materialize, could have meaningful implications for financial markets. Lower borrowing costs could stimulate economic activity and benefit risk assets such as equities and high-yield bonds. It could also lift performance in certain ETFs, with some analysts suggesting that a more accommodative monetary policy could lead to substantial gains for instruments like the BlackRock ETF [4].

With the September Federal Open Market Committee meeting approaching, investors will continue to monitor key economic indicators for further signals. If the Fed acts in line with BlackRock’s expectations, it could mark the beginning of a broader easing cycle, with potential ramifications for global capital flows and asset valuations.

[1] title:BlackRock Research: The Fed is Expected to Begin Cutting Rates in September, with a Rational Basis for a 50 Basis Point Cut (https://www.theblockbeats.info/en/flash/307117)

[2] Norada Real Estate. (2025, August 12). About Marco Santarelli (https://www.noradarealestate.com/blog/author/marco-santarelli/)

[3] AInvest. (2025, July 20). Bitcoin Surges 3% to $120000 on U.S. Policy Shift (https://www.ainvest.com/news/bitcoin-surges-3-120-000-policy-shift-2508/)

[4] AOL.com. (2025, August 6). This BlackRock ETF Could Soar 18000%, According to ... (https://www.aol.com/blackrock-etf-could-soar-18-091000452.html)