Larry Fink, CEO of BlackRock, says “embedded inflation” is too high therefore, The U.S. Federal Reserve won’t lower interest rates as expected.
Fink, a global leader in investment and technology solutions spoke at the annual flagship investment conference in Riyadh, Saudi Arabia, today. Approaching the topic of interest rates, Fink said “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 we have greater embedded inflation in the world than we’ve ever seen.”
Fink highlighted the government’s recent onshoring efforts that invest in domestic jobs and reduce dependence on foreign supply chains.
“We have government and policy that is much more inflationary. Immigration — our policies of onshoring, all of this — no one is asking the question ‘at what cost.’ Historically we were, I would say, a more consumer-driven economy, the cheapest products were the best and the most progressive way of politicking.” Fink says manufacturing changes and the push to produce domestically have contributed to increases in the price of goods.
In September, The Federal Reserve signalled an economic turning point by cutting its benchmark rate by 50 basis points. Following this, JP Morgan predicted two additional rate cuts by the end of 2024, continuing into 2025.
Fink disagreed, “Today, I think we have governmental policies that are embedded inflationary, and, with that being said, we’re not gonna see interest rates as low as people are forecasting,” Fink concluded.
BlackRock, Fink’s firm, is the largest money-management firm in the world – holding more than US$10 trillion in assets.
By CEO NA Editorial Staff
