(Bloomberg) -- The Federal Reserve could risk losing its credibility if it cuts interest rates too soon, according to Eric Veiel, chief investment officer and head of global investments at T. Rowe Price Group Inc.

“Jerome Powell said very early on he is a student of what happened in the seventies,” he said on Bloomberg Television. “If they go ahead and start cutting now, I think they are in danger of making the same mistake.”

In the 1970s, the Fed eased policy before inflation was fully vanquished. 

Powell reiterated last week that the US central bank isn’t in any rush to cut rates as policymakers await more evidence that inflation is slowing. Veiel said he was never too optimistic about the rate cuts the market had priced in. 

Stocks dropped Tuesday — with the S&P 500 Index seeing its worst day in almost a month — after solid economic readings boosted bets that the Fed will keep rates higher for longer. 

T. Rowe Price, meanwhile, is “dramatically neutral” between stocks and bonds, Veiel said. He does still think they can be some benefit from diversification within bonds, and added that having a real-assets sleeve within a portfolio is worthwhile.

“I do think commodities is really interesting,” he said. “Within our equity portfolios, we’re overweight energy.”

--With assistance from Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern.

(Updates to add comments on bonds, real assets in the sixth paragraph.)

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