"It's not only a zero percent funds rate. If you assume that the Fed has $4.5 trillion on the balance sheet you have an effective funds rate well below zero percent," the CIO of fundamental fixed income told CNBC's "Squawk Box" in an interview.
"That's not the right level, given what growth is in the economy and given where we're going," said Rieder, who oversees more than $720 billion in fixed income assets at BlackRock and is called by some the new bond king. He sees any rate hike as gradual. "It's not that scary."