Karla Barker 
Rising energy prices and increased inflation risk due to the US-Iran conflict have negatively impacted Bitcoin and broader market expectations regarding the Federal Reserve. The conflict has pushed inflation expectations higher, effectively eliminating the possibility of a Fed interest rate cut in 2026 and raising the possibility of a rate hike instead.
While the market increasingly talks about rate hikes, BlackRock has offered a completely opposite analysis. Navin Saigal, Head of Global Fixed Income Business for the Asia-Pacific region at BlackRock, said the Fed may opt for interest rate cuts despite growing expectations of hikes.
BlackRock’s Contrarian View
Speaking to Bloomberg TV, Saigal noted that structural dynamics justifying a cycle of interest rate cuts have matured. This stands in stark contrast to market sentiment. He pointed out that market expectations of rate hikes under newly appointed Fed Chairman Kevin Warsh are overpriced, creating a “mispricing.”
Saigal said current economic conditions actually make a rate cut more likely. He stated, “If you force me to choose between raising and lowering rates, I think there are more factors supporting the possibility of a rate cut right now. I think there will be some pressures on the job market in the coming period. This will lead the Fed to either keep rates at least stable or lower them.”
Market Pricing and Outlook
The BlackRock executive argues that a rate cut is still possible in 2026, but a cut is not expected in June. According to CME FedWatch data, the probability of the Fed keeping interest rates unchanged in June is priced at 98.1%, while the probability of a rate increase is priced at only 1.9%.
Warsh himself stated that the US central bank has sufficient justification and infrastructure to move towards interest rate cuts rather than raises. This suggests internal debate within the Fed may be more dovish than the market currently prices.
It remains to be seen whether inflation pressures will ease enough to allow cuts. For now, BlackRock’s analysis adds a cautious counterpoint to the prevailing hawkish narrative. This is not investment advice.