BlackRock CEO Larry Fink has expressed skepticism about the Federal Reserve significantly cutting interest rates this year, citing high "embedded inflation." Despite the Fed's recent rate cut of 50 basis points, which surprised many, Fink believes that only one more cut is likely before the year ends, going against the expectations of two additional 25 basis point cuts predicted by some investors.
Fink shared these insights during the eighth Future Investment Initiative (FII) Summit in Saudi Arabia, where several other Wall Street CEOs were present, including those from Goldman Sachs and Morgan Stanley. His remarks highlighted the ongoing challenges posed by global inflation, which he believes is exacerbated by current government policies and supply chain re-shoring efforts in the U.S.
The U.S. has been working to revive domestic manufacturing to reduce reliance on international supply chains, a movement supported by President Biden's Infrastructure Investment and Jobs Act and the Inflation Reduction Act. However, higher domestic labor costs remain a concern, potentially leading to increased product prices.
None of the Wall Street executives at the summit agreed with the notion of two more rate cuts by the Fed this year, aligning with Fink's more conservative outlook on monetary policy adjustments.
