Rick Rieder from BlackRock is a possible candidate for the Federal Reserve chair position, considered by Trump. After the latest U.S. CPI report, Rieder predicts the Fed might cut rates by 50 basis points in September because inflation was lower than expected. The new U.S. inflation data showed stronger numbers than recent months but didn’t rise to the levels the markets expected. There are positive signs in core inflation, which is lower than in previous years.

Possible Changes to Federal Reserve Policy

Rieder thinks the Fed could change its policy during the September meeting. He believes a bold 50-basis-point rate cut could support long-term inflation goals, especially considering productivity gains in various sectors. Rick Rieder is the Chief Investment Officer of Global Fixed Income at BlackRock. With the September Fed meeting approaching, there’s an increasing chance of a 50 basis point cut. This is more aggressive than what the market expected, driven by political factors and a belief that inflation is under control. This outlook suggests the Federal Reserve may take strong actions to boost economic growth. The case for this cut is backed by the week’s Consumer Price Index (CPI) report. While it was firmer than recent months, the year-over-year Core CPI reading of 2.8% was better than feared and continues a general disinflation trend from the highs in 2022. Strong labor productivity, which grew by 2.5% in the second quarter of 2025, also helps ease wage pressures.

What This Means for Traders and Markets

In response, fed funds futures markets have changed significantly, showing a 45% chance of a 50 basis point cut in September, up from just 10% last week. This indicates that traders take the possibility of a larger move seriously, creating new opportunities in short-term interest rate derivatives. For those trading derivatives, this suggests a need to prepare for lower rates. Buying September or December SOFR (Secured Overnight Financing Rate) futures is a direct way to support this outcome. These contracts will rise in value if the Federal Reserve implements the suggested rate cuts. This potential large cut is notable, as the Fed hasn’t launched an easing cycle with a 50 basis point cut since the emergency measures during the COVID-19 crisis in March 2020. Normally, the first move is a more cautious 25 basis points. This context hints at a possible notable increase in volatility around the announcement. As a result, we are considering options on equity indexes, as a sharp rate cut could be good for stocks. Call options on the S&P 500 with September or October expirations might offer leveraged gains in a market rally. On the other hand, a weaker dollar could make put options on the U.S. Dollar Index (DXY) a smart hedge or speculative move. Create your live VT Markets account and start trading now.

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