NEW YORK, March 21 - Longer-term U.S. Treasuries could be vulnerable if the Federal Reserve's outlook on interest rate cuts is challenged by stubborn inflation, a portfolio manager at asset management giant BlackRock said on Thursday.
Should inflation remain persistently strong, however, prices for intermediate and longer term bonds could suffer because they do not fully reflect a scenario in which the Fed is forced to keep rates higher for longer, David Rogal, portfolio manager of BlackRock's Fundamental Fixed Income Group, said in an interview.
Rogal also noted that while Fed officials still expect three rate cuts this year, they projected a slightly slowed rate cut path for the next two years. After hiking rates aggressively to fight inflation, the Fed took a dovish turn in December when it signaled coming rate cuts, but strong economic and inflation data this year have clouded the prospects of a quick return to lower interest rates.
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