Larry Fink says Fed won't cut interest rates as much as people think, warns inflation 'embedded'
Published On Oct 29, 2024, 2:12 PM
Larry Fink, CEO of BlackRock, indicated that he does not expect the Federal Reserve to significantly cut interest rates as many analysts predict. He cites "embedded inflation" as a key reason for this outlook, emphasizing that there is deeper inflationary pressure globally than ever before. While a 25 basis point cut is anticipated, Fink warns that the overall environment of inflation could lead to interest rates remaining higher for a longer period than forecasts suggest. Current inflation remains above the Fed's target of 2%, despite some easing recently. He also noted that U.S. government policies have become more inflationary, which complicates the economic landscape.
Stock Forecasts
XLF
Positive
Given the expectation that interest rates may not decrease as much as anticipated, particularly due to persistent inflation, financial sectors that perform better in high-interest environments may benefit. Stocks related to financial services or ETFs focused on financials could see positive movement.
XLP
Negative
If inflation continues to be a concern and economic policies remain inflationary, sectors like consumer staples might be pressured as higher prices could affect demand. This could lead to negative performance in consumer-focused companies as households face financial strains.
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