View more on these topics

BlackRock claims open-ended easing cycle is key to increasing investor confidence

The key to rebuilding shattered investor confidence would be for the Fed to indicate that the easing cycle could become open-ended if conditions in the credit markets do not stabilise, according to BlackRock.

Vice-chairman and chief investment officer for global equities Bob Doll says the Fed does not want its actions to be construed as “bailing out” those who made risky investments however.

He says: “Against a background of weakening economic activity and moderating inflation, we believe the central bank is likely to cut rates by 25 basis points and to provide a statement that points toward a bias of further easing. Time will tell whether that will be enough to calm financial markets.”

Doll adds that the severity of the credit market turmoil has been unprecedented, and there is evidence that it has begun to weigh on the U.S. economy, as seen in the recent weakening of the jobs market.

He says: “The credit crisis and the associated disruptions in financial markets appear to be part of a mid-cycle economic slowdown, which has not yet ended. We expect that credit woes will continue and that recessionary fears will intensify over the next several months. However, we also believe that economic growth will trend higher as the credit issues eventually ease, and our bet is that the shift in Fed policy will go a long way toward making that happen.

“While stocks are likely to remain volatile, the bull market, in our opinion, remains intact.”

Recommended

‘Aifa is defending small IFAs’

Small IFAs are scared of being “victimised” by the FSA and many feel Aifa is the only body looking out for their interests, says Kent-based RH Invest-ment Services.

We’re joining Aifa as it’s doing a great job

RH Investment Service has decided to join Aifa as it feels this is the best industry body to look after the interests of the majority of the IFA community. Aifa are doing a sterling job in representing IFAs’ views with regard to the retail distribution review. We have two approved persons and £370 is a […]

Street life

Many people say that their career in financial services came about by chance and I am no exception.I left school 18. I was searching for a summer holiday job that paid well before going to university when I spotted an ad which said: “Do you want to earn £200 a week?”After three days of intensive […]

LibDem conference: Fierce attack on Brown and regulators over Northern Rock

Blame for the problems facing Northern Rock rests with greedy executives, “lax and indulgent” regulation and a complacent Government, say the LibDems.Speaking at the LibDem conference in Brighton today, Shadow Chancellor Vince Cable focused his attack on Gordon Brown suggesting his economic policies have been built on a “floodplain” that may well soon be tested […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment