Blackrock chief executive officer Larry Fink said Tuesday, October 29, speaking at a CEO-studded panel in Riyadh, Saudi Arabia, that the Federal Reserve will not cut interest rates on the scale that markets expect, as currently embedded inflation is too high.
Mr. Fink, whose mammoth fund oversees over $10 trillion in assets, expects that the central bank of the United States will make another decision on lowering the cost of borrowing by the end of the current year. It is worth noting that some other market participants predict that in the remaining months of 2024, the US financial regulator will cut interest rates two more times.
Larry Fink said at a panel during Saudi Arabia’s annual flagship investment conference, the Future Investment Initiative, that it would be fair to state that the Fed will lower borrowing costs by at least 25 basis points. At the same time, he stated that, in his opinion, the world is currently experiencing greater embedded inflation than ever. In this context, Larry Fink also mentioned government and policy that is much more inflationary. It is worth noting that the situation in the United States is implied. Separately, Larry Fink said that no one does not ask the question about the cost of immigration – policies of onshoring. In his opinion, historically, the economic system of the United States has been more driven by consumer activity. In the relevant context, he stated that the cheapest products were the best and most progressive way of politicking.
Larry Fink’s mention of onshoring highlighted Washington’s efforts in recent years, especially after the coronavirus pandemic, to reduce the United States’ dependence on foreign supply chains and invest in domestic jobs, primarily in the manufacturing industry. US President Joe Biden’s administration’s legislation, such as the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, have pushed the mentioned efforts forward. These changes may cause goods’ prices to rise because workers in the United States are paid more than in offshore manufacturing destinations such as China.
Larry Fink stated that, in his opinion, Washington is currently pursuing governmental policies that are embedded in inflationary. He noted that, against this background, the interest rates would not be as low as many predict.
As we have reported earlier, Morgan Stanley CEO Says About End of Era of Zero Interest Rates and Inflation.
