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.

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Stock Forecasts

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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.

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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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