BlackRock CEO Larry Fink told investors on Tuesday They are wrong if they think the Fed will cut interest rates in a big way later this year because billionaire moneymakers believe the US economy will continue to grow.
Fink rejected market predictions that there would be further rate cuts by the end of the year after Chairman Jerome Powell lowered rates by half a percentage point two weeks ago.
It was the first cut since 2020 and a bigger cut than expected as Western economies were emerging from the global coronavirus pandemic.
“I believe there is room for more relaxation,” boss of investment giant It manages at least $9 trillion in assets, Bloomberg TV reported in an interview.
“I see more policies by more governments that are going to lead to more inflation. With that in mind, it’s hard for me to see a 200 basis point drop in short rates.
A 200 basis point rate cut by Fed officials between now and the end of 2024 would shave two percentage points from its current level of 4.75%-5%.
Economists are already pointing to Friday’s jobs report as a key piece of data that could change the Fed’s policy path.
If the unemployment rate rises significantly or hiring falters, officials could consider a sharp rate cut later this year.
Using a term for a slow or stagnant economy that could eventually slide into recession, Fink said: “I don’t see any recession.
“We will continue to grow. There are parts of the economy that are struggling. There are several segments that are performing really well,” he said. “We are going to grow at 2 or 3%.
Low interest rates are intended to make it less expensive for businesses and households to borrow and therefore spend more freely in the hopes of boosting economic growth.
But overly aggressive cuts could pump too much money into the economy, potentially fueling inflation – an increase in goods and services over time – once again.
Fink, the founder of the world’s largest asset manager, pointed to strong corporate earnings as a sign that the US economy was in better shape than some commentators had suggested.
He also took a dig at US corporate giants still doing extensive business in China because of how Beijing was supporting Russia by buying more oil and gas supplies.
“Ukraine is on our doorstep and I’m surprised there are no bigger questions or demands — you’re supporting our enemy,” the top money man told Bloomberg. “There should be a price for this.”
According to Forbes, Fink has an estimated net worth of $1.2 billion, and is a longtime donor to the Democrat Party.
BlackRock has been a vocal cheerleader in recent years For the Biden administration’s policies on environmental social governance, commonly known as ESG.
It is customary to encourage major firms and investors to be conscious of climate change as part of their business models, but also encourages diversity in corporate boardrooms.
Fink has clashed in recent months with fellow Wall Street titan Boaz Weinstein, whose Saba Capital Management has conducted a proactive raid on a series of BlackRock funds this year.
Sabah, which has acquired majority stakes in at least 10 funds, argues that BlackRock’s mismanagement is reducing the funds’ profitability.
Weinstein’s investment firm currently has approximately $5 billion in assets under management.
