Larry Fink, CEO of BlackRock, the world’s largest asset management company, predicted on Friday that the Federal Reserve will only cut interest rates twice within 2024 and will not be able to achieve the goal of reducing the inflation rate to 2% this year.
Recent CPI and non-farm payroll data released in the United States exceeded market expectations, reflecting a strong labor market and persistent inflation. The market pessimistically believes that the hope of the Federal Reserve initiating a rate cut in June is slim. Goldman Sachs has once again lowered its expectations for the number of rate cuts this year, predicting that there will only be two rate cuts, one in July and one in November, which is lower than the three rate cuts predicted by most Fed officials at the March meeting.
Larry Fink, CEO of BlackRock, who also predicts that the United States will only cut interest rates twice this year, stated in an interview with CNBC yesterday that he expects the Federal Reserve to take some easing measures this year, but it will not be able to achieve the goal of reducing the inflation rate to 2% within this year. Several Federal Reserve officials have emphasized that it is not appropriate to cut rates too early before seeing more data showing the inflation rate reaching the 2% target.
Larry Fink: The Federal Reserve will not achieve the 2% inflation target this year
Larry Fink, the CEO of BlackRock, which has assets under management of $10.5 trillion and achieved great success with the launch of its own Bitcoin spot ETF earlier this year, pointed out that it is unlikely that the Federal Reserve will achieve the 2% inflation target soon. He believes that the central bank’s target may have been set too high.
Market pessimistic about the start of rate cuts in June
This week, Raphael Bostic, the president of the Atlanta Federal Reserve Bank, who has a dovish stance and voting rights this year, reiterated his expectation that there will only be one rate cut by 2024. Barclays Bank also adjusted its rate cut expectations on the 10th, believing that the Federal Reserve will only cut rates once this year, by 1 basis point. However, there are still some officials who predict that there will be three rate cuts this year.
CME FedWatch Tool data shows that the probability of keeping rates unchanged in the range of 5.25% to 5.50% in June is as high as 71.7%, the probability of a 1 basis point rate cut starting in July is about 44.5%, and the probability of a 2 basis point rate cut is 11.4%.
Market pessimistic about starting rate cuts in June. Source: CME FedWatch Tool.