Advertisement

Anti-inflation fight may spur recession, investment opportunities -BlackRock

A trader works as a screen displays the trading information for BlackRock on the floor of the NYSE in New York

NEW YORK (Reuters) - Central bank efforts to tame inflation could spark a recession and market selloff that later this year or in 2024 leads to investment opportunities, the BlackRock Investment Institute (BII) said on Monday.

Increased market volatility is likely ahead over talks in Washington to raise the U.S. government's $31.4 trillion borrowing cap. But the old playbook of buying the dip does not apply now, the institute said.

Contrary to past recessions, "rate cuts are not on the way to help support risk assets," it said, adding that a "recession is foretold as central banks try to bring inflation back down."

Any selloff may cause risk assets to better price in the economic damage the institute expect from interest rate hikes.

"We're ready to shift our views on a six- to 12-month horizon to take advantage of opportunities that may appear," it said.

(Reporting by Herbert Lash; Editing by Will Dunham)