BlackRock’s Larry Fink says market is pricing too many interest-rate cuts from US Fed

BlackRock Chairman and Chief Executive Officer Larry Fink said the market was pricing too many interest rate cuts from the United States Federal Reserve (Fed) given the US economy's continued growth, news agency Bloomberg reported on Tuesday, October 1.

Fink, the head of the world's largest asset management company (AMC), said, “I don’t see any landing,” during an interview at the Berlin Global Dialogue 2024 conference.

“The amount of easing that’s in the forward curve is crazy. I do believe there’s room for easing more, but not as much as the forward curve would indicate,” said Fink, as per the report.

The money market shows a one-in-three chance the US Fed will do another half-point rate cut in November and price a total of about 190 basis points of easing by the end of next year, according to the report.

Fink highlighted that it is hard for him to see that coming into play, as most of the current government policies are more inflationary than deflationary, cited the news agency.

The US Fed cut its key benchmark interest rates by 50 basis points in September, its first rate cut since 2020.

Since the rate cut, investors, traders and analysts have been debating on the policymaker's approach size and pace in the coming months.

US Federal Reserve Chairman Jerome Powell on Monday said that the central bank will lower interest rates “over time” and highlighted that the overall US economy remains on solid footing. Powell reinforced his confidence that inflation will continue to move towards the 2 per cent target.

“There are segments of the economy that are struggling. There are segments of the economy that are doing really well,” said Fink. “We spend so much time focusing on the segments that are doing poorly,” he told Bloomberg.

Fink added that despite asset valuation and some geopolitical issues, the market is not facing any real systemic risk and eyes company earnings to do well.

“I would argue today that because of the expansion of the global capital markets, we’re diffusing more risk than ever,” Fink was quoted as saying in the report. “There is actually less systemic risk today than ever before,” he observed.