qataratthe2022asiangames| BlackRock executive Rieder believes that curbing inflation requires interest rates rather than interest rates

BlackRock's Rick Rieder suggestedqataratthe2022asiangamesSome suggestions that contradict conventional wisdom: the best way for the Fed to curb inflation is to lower interest rates rather than keep them higher.

Rieder, BlackRock's global chief investment officer, said this is because the income of the wealthy in the United States from fixed income investments is as high as the benchmark interest rate remains at its highest level in about 30 years.qataratthe2022asiangamesThe highest level in years.

"I'm not sure if raising interest rates will really reduce inflation," Rieder said. "In fact, I would make an argument that actually if you lower interest rates, inflation will fall."

Middle-income Americans "are benefiting a lot from these interest rates," he said. "We're moving to a service-oriented economy, where more money is spent on services, but what's actually happening-because commodity prices have dropped a lot-is letting disposable income flow into services."

Rieder points to stubborn inflation in service sectors such as automobiles and health insurance as evidence. "They're not responding to interest rates, and people are spending-the elderly, middle-and high-income people are spending-keeping service inflation high."

"The price of a pair of tennis shoes is the level it was 20 years ago. If you go to a tennis game, the price doubles,"he continued.

But not all market observers are ready to overturn a basic tenet of monetary policy-that higher borrowing costs will ultimately dampen economic activity and, in turn, inflation.

"I think I would agree that the inflation that is now fading is largely not driven by monetary policy increases," Seth Carpenter, chief global economist at Morgan Stanley, told Bloomberg Surveillance on Friday. "But I am personally skeptical that everything-the empirical literature on how monetary policy works-is completely wrong."