- Mar 15, 2023
BlackRock CEO Expects More Rate Hikes as Inflation Persists
May 31, 2023
Larry Fink, CEO of BlackRock, the world's largest asset manager, said on Wednesday that he expects the Federal Reserve to continue raising interest rates in an effort to combat inflation.
"Inflation remains sticky," Fink said in a CNBC interview. "The Fed may need to hike rates further to contain price pressures."
The Fed has already raised interest rates by 75 basis points this year and is expected to hike by another 50 basis points at its next meeting in June.
Fink said that he does not expect a recession in the United States, but that the economy will slow down as the Fed tightens monetary policy.
"We're going to have a period of slower growth," he said. "But I don't think we're going to have a recession."
Fink's comments come as inflation in the United States is at a 40-year high. The Consumer Price Index rose 8.6% in May from a year ago, the biggest increase since December 1981.
The Fed is under pressure to bring inflation under control, but it is also trying to avoid a recession. The central bank is walking a tightrope, and it remains to be seen whether it will be able to achieve its goals.
In addition to raising interest rates, the Fed is also expected to start reducing its balance sheet in June. The balance sheet has ballooned to $9 trillion as the Fed bought Treasurys and mortgage-backed securities to support the economy during the pandemic.
Reducing the balance sheet will help to drain some of the excess liquidity from the financial system and could help to cool inflation. However, it could also lead to higher interest rates and slower economic growth.
The Fed is facing a difficult task, and it remains to be seen how it will be able to bring inflation under control without causing a recession.