BlackRock CEO Larry Fink warns of stubborn inflation - but expects growth to accelerate this year if interest rates drop
- Inflation could prove harder to conquer than many people think, Larry Fink says.
- The BlackRock CEO expects US economic growth to pick up if the Fed cuts rates this year.
Larry Fink expects US inflation to prove stubborn, but economic growth to get a boost if interest rates fall this year.
The billionaire CEO of BlackRock, the world's largest asset manager with $10 trillion under its control, recently told Fox Business that he doubts annualized price growth will slow to the Federal Reserve's target rate of 2%.
Headline inflation spiked to a 40-year high of over 9% in the summer of 2022, fueled by historic amounts of government spending and disruptions to global supply chains. It has dropped below 4% in recent months.
"Inflation's — in my mind — a little stickier at 3%," Fink said.
Rapid inflation has spurred the Fed to hike interest rates from nearly zero to over 5%. If it remains elevated, that could prevent the central bank from cutting rates as quickly as expected. Higher rates are also associated with slower growth, increased unemployment, and lower asset prices, raising the prospect of a market downturn or a recession.
However, Fink argued the American economy is well placed to weather any trouble ahead. GDP growth was nearly 5% in the third quarter, unemployment remains at a historic low of below 4%, and resilient corporate earnings have buoyed stock prices.
"I think the economy's in a very good position," Fink said, adding that he expects it to strengthen if the Fed cuts rates two or three times this year. He struck a similarly optimistic tone on the long-term outlook for the US stock market and wider economy last year.
Separately, the Wall Street executive weighed in on bitcoin after US regulators approved spot ETFs for the cryptocurrency last week.
"It's still one of the vehicles for illicit activity," Fink said, echoing criticism from the likes of JPMorgan CEO Jamie Dimon and SEC Chair Gary Gensler. However, he also said the token has merit and offers opportunities to investors, and hailed it as "digital gold" and a great store of value.