BlackRock, the world’s largest asset management company, CEO Larry Fink predicted on Friday that the Federal Reserve will only cut interest rates twice by 2024 and will not be able to achieve the goal of reducing the inflation rate to 2% this year.
(Background: Biden Rarely States His Position on Fed Interest Rates: May Delay Rate Cut for a Month… Goldman Sachs Predicts Only 2 Cuts This Year, Starting in July)
(Background: 3 Times or No Rate Cut? Wall Street, Federal Reserve Officials Differ on Rate Expectations)
The recent release of CPI and non-farm payroll data 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 launching a rate cut in June is slim. Goldman Sachs has once again lowered its rate cut expectations this month, expecting only two rate cuts this year, 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, said in an interview with CNBC yesterday (12th) that he expects the Federal Reserve to take some rate-cutting measures this year, but will not be able to achieve the goal of reducing the inflation rate to 2% within this year. Many Federal Reserve officials have emphasized that it is not appropriate to cut rates too early before seeing more data showing the inflation rate falling to the 2% target.
Larry Fink: The Federal Reserve will not achieve the 2% inflation target this year
Larry Fink, CEO of BlackRock, with $10.5 trillion in assets under management and the successful launch of their own Bitcoin spot ETF at the beginning of the year, pointed out that the Federal Reserve is unlikely to achieve the 2% inflation target in the near future. He believes that the central bank’s target may have been set too high.
Market pessimistic about rate cut in June
This week, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, who has a dovish stance and voting rights this year, reiterated his expectation that there will only be one rate cut in 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 one notch. However, some officials still predict three rate cuts this year.
CME Fed Watch data shows that the probability of maintaining rates in the 5.25% to 5.50% range in June is as high as 71.7%, the probability of a one-notch rate cut starting in July is about 44.5%, and the probability of a two-notch rate cut is 11.4%.
Market pessimistic about rate cut in June. Source: CME Fed Watch Tool
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