US Markets

Pace, destination of rate hikes important: BlackRock

Base case, Fed move in September: BlackRock CIO

While Wall Street is trying to guess when the Federal Reserve may begin to raise interest rates, the pace of the increases and the final destination is what's more important, BlackRock's Rick Rieder said Wednesday.

Earlier in the afternoon, the Federal Reserve released its post-meeting statement, making no changes to its interest rate policy. The central bank also removed all calendar references for when a hike could occur.

"There's this unbelievable focus on the date they start," said Rieder, co-head of BlackRock Americas fixed income.

"I think they're going to be very deliberate, and I think they're very concerned about not hitting the back end of the curve … and I think the destination is lower, as well."

Rick Rieder, BlackRock
Scott Mlyn | CNBC

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For example, the Fed could raise rates by 25 basis points in September, perhaps wait a period and then add another 25 basis points, he told CNBC's "Closing Bell."

He called September the base case for the first rate hike.

Although the first quarter disappointed, he thinks the second quarter will provide the central bank an opportunity to make a move.

"We think the second quarter is going to be better and will give them a window to do it. We do think they want to do it and they should do it," he said.

As for concerns about a liquidity problem in the bond market, most notably raised by JPMorgan CEO Jamie Dimon and former Treasury Secretary Larry Summers, Rieder said, "there's no doubt that it's harder to transact broadly in the marketplace."

He said liquidity is a function of uncertainty and believes that once the Fed lays out a plan the market will stabilize.

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