Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink at the New York Times DealBook Summit in the Appel Room at Jazz at Lincoln Center on November 30, 2022 in New York City Larry Fink.
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BlackRock Chief Executive Larry Fink told a panel of CEOs in Riyadh, Saudi Arabia, on Tuesday that the Fed would not cut interest rates as the market expected because “implied inflation” was too high. .
Fink, whose massive fund manages more than $10 trillion in assets, expects one rate cut by the end of the year, compared with two cuts predicted by other market participants.
“I think it’s fair to say we’re going to have at least a 25 basis point cut, but that being said, I do believe there’s more inherent inflation in the world than we’ve ever seen,” Fink said. In Saudi Arabia Said this during a panel at the Future Investment Initiative, the annual flagship Arab investment conference.
“We have a much higher inflation rate with our government and policies. Immigration – our native policies, all of this – no one is asking the question ‘at what cost’. I would say, historically, we are A more consumer-driven economy where the cheapest products are the best and most progressive approach to politics,” he noted.
The onshoring Fink mentioned underscores U.S. efforts in recent years to reduce reliance on foreign supply chains and invest in domestic jobs, particularly in manufacturing, especially in the wake of the Covid-19 pandemic. Biden administration legislation such as the Inflation Reduction Act and the Infrastructure Investment and Jobs Act have given a boost to these efforts. These changes could cause commodity prices to rise as U.S. workers earn higher wages than workers in many offshore manufacturing destinations such as China.
“Today, I think our government policy is embedded with inflation, and having said that, we’re not going to see interest rates as low as people predict,” Fink said.
The Federal Reserve cut its benchmark interest rate by 50 basis points in September, marking a turning point in its management of the U.S. economy and its inflation outlook. In a late-September report, strategists JPMorgan Chase and Fitch Ratings Two more rate cuts are expected by the end of 2024, with such cuts expected to continue into 2025.
American consumer price indexone Key Inflation Indicatorswas Up 2.4% in September Compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics. This figure was down from 2.5% in August, implying slower price growth. September’s reading was also the smallest annual reading since February 2021.
A group of CEOs spoke on a follow-up panel to the event, including Wall Street heavyweights such as Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered and State Street Bank – were asked to show their hands if they thought the Fed would implement two additional rate cuts this year. No one raised their hands.
