Larry Fink says the Fed won’t cut interest rates as much as some think

CEO BlackRock Larry Fink said Tuesday he doesn’t believe the Federal Reserve will cut interest rates as much as some analysts expect because of “built-in” inflation.

During a roundtable at the annual Future Investment Initiative (FII) in Saudi Arabia, the head of the world’s largest asset manager was asked how much he sees central bank rate reduction until the end of 2024.

“It’s fair to say we’re in for at least 25 (basis point cuts), but that being said, I do believe we have higher built-in inflation in the world than we’ve ever seen,” Fink said.

In September, the Fed cut rates by 50 basis points, lowering the benchmark federal funds rate for the first time in four years to a range of 4.75% to 5%. Following the cut, JPMorgan analysts forecast two more rate cuts by the central bank by the end of this year, with further cuts throughout 2025.

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The Ministry of Labor reported on inflation it got colder in September to its lowest level in three years, although it was slightly hotter than expected, with the consumer price index rising 2.4% from a year earlier.

Overall, the report showed signs that inflation pressures in the US economy continue to ease, although prices remain above the Fed’s 2% target.

High inflation has created severe financial pressure for most US householdswho are forced to pay more for everyday needs such as food and rent.

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“We have a government and policies that are much more inflationary – whether it’s immigration, our entrenchment policies – all of this, no one asks the question: at what cost?” Fink said this at the FII event.

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“Historically, we have been, I would say, a more consumer-driven economy, and the cheapest products have been the best, most progressive way to do politics,” he continued. “Today I think we have government policies that are built into inflationary policies, and given that, I think we won’t see interest rates as low as people are predicting.”