By Emily Russell
Rick Rieder, chief investment officer of global fixed income at BlackRock, was one of four finalists considered by President Donald Trump to succeed current Federal Reserve Chair Jerome Powell, whose term as chair ends May 15. He didn't get the nod, but he is pleased that former Fed governor Kevin Warsh did.
Rieder called Warsh "a brilliant guy" last week on Barron's Live, a weekly call with Barron's readers , adding, "I think he will do a great job."
The Senate is expected to confirm Warsh for the position soon.
Rieder, who described the vetting process for Fed chair as "incredibly rigorous," sees big changes ahead for the Fed after Powell's eight-year run. Like many Fed watchers, he anticipates that Warsh will advocate for lowering the federal-funds rate and limiting external communication of future policy moves, which might include eliminating the dot plot -- a quarterly chart that shows where Federal Open Market Committee members think interest rates are heading.
"This is going to be a different Fed," he told listeners.
Rieder oversees $2.4 trillion in assets at BlackRock and leads the team that manages the $16.8 billion iShares Flexible Income Active exchange-traded fund, launched in 2023. As of April 29, securitized products accounted for about 36% of assets, high-yield and loans 30.5%, and agency mortgage-backed securities almost 19%.
Rieder and Warsh seemingly agree on many things. Both say that productivity growth caused by artificial-intelligence adoption will drive down inflation, allowing the Fed to lower the federal-funds rate.
Warsh has discussed eliminating forward guidance on the trajectory of rates and reducing the Fed's communication. Both moves could increase volatility in the bond market. "I don't think that is a bad thing, given the other benefits that you could have," Rieder told Barron's Live listeners.
Rieder also agreed with Warsh's view that the current Fed is too dependent on backward-looking economic data. "In markets, if you focused on where we have been, you would be pretty poor at investing," he said.
The one element of Warsh's platform that Rieder questioned was the need to trim the Fed's balance sheet. Rieder said he isn't worried about the size of the balance sheet, which currently equals 21% of gross domestic product. In his view, the economy is growing so fast that the balance sheet can decrease by a percent a year without the Fed taking action.
From a bond investor's perspective, growing government debt could weigh increasingly on yields on longer-dated bonds. If the government can project a strategic plan to lower the debt over time, Rieder said, "the back end of the [yield] curve would stay contained and the dollar would stay reasonably strong."
Rieder thinks the economy is growing at a much faster clip than official forecasts, which put annual growth in nominal gross domestic product at 4% to 5%. He thinks nominal GDP growth could be closer to 6%, and said the massive capital expenditures on AI technology mean the economy is basically recession-proof.
The government's debt load and unemployment among young people are worrisome, Rieder said, but the idea that a weakening labor market could tip the U.S. into a downturn "is just flat wrong."
Despite tariffs and the war in Iran, the economy will keep growing, he said. Not only will greater productivity bring inflation down, but lower rates will help small businesses and the housing market, he predicted. AI infrastructure spend, coupled with -- and driving -- strong economic and earnings growth, spells good news for investors.
The technical backdrop for stocks also looks compelling. "I've never seen a better technical [setup] in the equity market in my life," Rieder said, citing the shrinking number of stocks. "Unless you think there is a real slowdown in tech investment, the backdrop is pretty darn good."
Write to Emily Russell at emily.russell@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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May 01, 2026 02:30 ET (06:30 GMT)
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