Larry Fink, CEO of Blackrock, has expressed his belief that the inflation rate in the US will remain above the 2% central bank target for a longer period of time. In an interview last Friday, Fink states that he does not expect a “big recession” in the United States.
Blackrock Clients Decrease Risk as Inflation Fears Remain
The head of Blackrock, Larry Fink, has predicted that US inflation will stay above its 2% target for an extended period of time. Fink, who is the Chairman and CEO of the asset manager with almost $9 trillion in assets under management, was interviewed by the hosts of CNBC’s “Squawk on the Street” last Friday. During the interview, Fink stated that he does not foresee a major economic downturn occurring in the United States.
“I’m not expecting a big recession in [the US],” Fink told the hosts. He further emphasized the importance of maintaining the significant fiscal stimulus that has been injected into the economy, claiming that “other sectors, because of these tremendous fiscal stimuli, are going to offset some of that.”
Fink also addressed the topic of inflation, highlighting that he believes it is going to be “stickier for longer” than the US Federal Reserve’s 2% goal. He predicted that there would be a “4ish floor in inflation.”
When asked about the possibility of a recession in 2023, Fink responded that he was “not sure we’re going to have a recession,” noting that some have suggested that it could come as early as 2024. He also expressed confusion at the reactions to the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank, claiming that they are “not a systemic problem” and will not have any major impacts on the economy.
In mid-March, Fink shared his thoughts on the banking sector and predicted that stricter capital standards for banks would be introduced. His remarks corresponded with those of Blackrock’s Chief Investment Officer of Global Fixed Income, Rick Rieder, who expects the US Federal Reserve to increase its benchmark rate to 6% this year and keep it at that leveled for a prolonged period of time to reduce inflationary pressures.
Fink also revealed that Blackrock’s clients are reducing risk in their portfolios, stating that “we’re seeing more and more clients who want to decrease risk while maintaining a more holistic and resilient portfolio by establishing a stronger foundation of bonds and equities.” Despite the current pessimism, Fink noted that the company had grown “more in this first quarter than the first quarter of ’22,” with a net inflow of $1.8 trillion.
What do you think Larry Fink’s predictions mean for the future of the US economy? Do you agree or disagree with the Blackrock CEO’s assessment of the inflationary environment and the likelihood of no recession in 2023? Share your thoughts in the comments below.
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