US Markets

Fed has painted self into corner: BlackRock's Fisher

Fed 'painted in a corner': Peter Fisher

The Federal Reserve's policymaking committee is losing credibility as market expectations diverge from Fed statements, BlackRock Investment Institute Senior Director Peter Fisher said Monday.

He noted that almost every member of the Federal Open Market Committee has said it expects to raise rates by year-end, but the market doesn't see that. Likewise, he added, the FOMC sees inflation getting back to its 2-percent target over the medium term, but forward interest rates "just don't reflect that at all."

"I think the committee's painted itself in a corner," Fisher told CNBC's "Squawk Box." "They've been conveying to us this idea that it's all just about the next piece of data, but I think they're having a much more fundamental argument."

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Fed officials have commented that the economy is finely balanced and could speed up or slow down, and thus central bankers should maintain its zero-interest rate policy, he said. But the official FOMC statement has consistently said something quite different, Fisher insisted.

"It said the outlook for the economy and the labor market is nearly balanced, meaning once it became balanced, it would be the time not to have zero interest rates," he said.

The FOMC announced it would keep interest rates near zero at its September meeting. Most investors now expect the Fed to wait until 2016 to hike rates, according to the CME FedWatch tool, which measures 30-day fed fund futures prices