Larry Fink, CEO of BlackRock, which manages over $10 trillion in assets, shared his views during a CEO discussion panel in Riyadh, Saudi Arabia. He explained that the Federal Reserve is likely to cut interest rates less than the market expects, citing high embedded inflation as the primary reason.
While many market participants predict the Fed will reduce rates twice by the end of the year, Fink believes there will be only one rate cut. He forecasted a cut of at least 25 basis points, highlighting that the inflation tied to government policies is significantly high and particularly severe.
Fink pointed out that amidst policies on immigration and domestic decisions, crucial questions about the costs involved are often overlooked. This, he argues, contributes to a higher inflation rate in the U.S. compared to other parts of the world.
