BlackRock’s Rick Rieder, a recent contender for Federal Reserve chair, said Kevin Warsh faces a major challenge because higher interest rates may not lower household costs when inflation is being driven by supply pressures. Citing the San Francisco Fed’s analysis, Rieder said cyclical inflation components were generally well behaved, while energy, insurance, healthcare and education costs were rising and being passed through to consumers. He said the Fed still had a directive to move rates marginally higher because inflation remained above target, and that inaction was not preferred. The Wednesday increase was the Fed’s first rate hike since July 2023, coming as sticky CPI and PPI readings and higher energy costs pushed central bankers back toward tightening. The updated economic projections and dot plot (Fed officials’ rate outlook) left open the possibility of one more increase this year. Hawkish messaging from Fed Chairman Kevin Warsh initially pressured global stocks and lifted borrowing-cost concerns, with the Dow Jones Industrial Average falling 631.21 points the following day. Robinhood Markets chief investment officer Stephanie Guild likewise said a rate increase would not resolve high demand for money, shrinking oil supply and heavy economy-wide debt; she advised investors to hedge and own assets that benefit from higher oil prices. Historical analysis from The Kobeissi Letter found that the S&P 500 fell an average of 4.0% during the six weeks after the first hike in seven rate cycles since 1988, then recovered those losses over the next five to six weeks. The index gained an average of 4% after six months and 9% after 12 months, with positive 12-month returns in every episode except 2022.