BlackRock says the Federal Reserve could hike interest rates to a peak of 6%

The world's largest plus manager sees the U.S. national funds complaint peaking astatine 6% aft Fed Chair Jerome Powell warned involvement rates are apt to caput higher than the cardinal slope antecedently expected.

"We deliberation there's a tenable accidental that the Fed volition person to bring the Fed Funds complaint to 6%, and past support it determination for an extended play to dilatory the system and get ostentation down to adjacent 2%," BlackRock's main concern serviceman of planetary fixed income Rick Rieder wrote successful effect to Powell's testimony earlier the Senate Banking Committee connected Tuesday.

The system is much resilient than expected, Rieder said, pointing to the most caller jobs report and consumer terms scale reading.

"This is partially owed to the information that today's system is nary longer arsenic interest-rate delicate arsenic that of past decades, and its resilience, portion a virtue, does complicate matters for the Fed," helium wrote successful the note.

BlackRock's telephone for a terminal complaint of 6% comes arsenic Morgan Stanley economists said Powell's commentary opened the doorway to resume to larger hikes of 50 ground points.

In February, the cardinal slope raised rates by 25 ground points, bringing the national funds complaint to a scope of 4.50% to 4.75%.

The probability of a half-point hike moved to 73.5% successful Asia's Wednesday afternoon, according to the CME Group's FedWatch tracker of fed funds futures bets. A 50 ground constituent hike would bring the complaint to a scope of 5% to 5.25%.

The Federal Reserve is slated to conscionable connected March 21-22.

Emphasizing the U.S. economy's resilience, Rieder compared it to polyurethane, a durable worldly described by the American Chemistry Council arsenic "flexible foam."

"We've precocious likened the U.S. system to polyurethane, which is simply a singular worldly that displays flexibility and adaptability, but besides durability and strength," helium wrote successful the note.

"The material's quality to beryllium stretched, bent, stressed and flexed without breaking, portion successful information returning to its archetypal condition, is what makes it truthful chemically unique," helium said.

In its latest report, the U.S. reported an summation of 517,000 nonfarm payrolls successful January, importantly exceeding marketplace estimates, portion the unemployment complaint fell to 3.4%, the lowest level since May 1969.

The adjacent study is expected Friday and is apt to proceed to amusement a resilient labour marketplace contempt the Fed's assertive complaint hikes to tame inflation. Economists surveyed by Dow Jones estimation 225,000 jobs were added past month.

– CNBC's Patti Domm and Jeff Cox contributed to this report.