BlackRock CEO Larry Fink told the Future Investment Initiative (FII) in Riyadh that he did not expect to see a soft or hard landing in 2024, but there may be one by 2025, after the USA had seen its largest peace time fiscal stimulus.

Speaking at the FII, Fink cited the CHIPS Act, signed into law by Joe Biden to provide $280 billion in funding for domestic research and manufacturing of semiconductors, as well as the Inflation Reduction Act (IRA) as the stimuli.

“At the same time the central bank is trying to arrest an economy,” he said, adding: “I do believe the Federal Reserve will have to raise rates again,” and pointed out that the European economy is currently facing more head winds.

The USA takes much longer to feel the effects of rising rates, he said, due to 98% of its mortgages being fixed for 30 years.

Fink also cited a series of inflationary factors, including higher interest rates, which he said reminded him of the 1970s, a period of time which was “all about bad policy”.

Polarisation of supply chains and fragmentation, countries moving to the far right leading to curbs on legal immigration, and populist policies that result in immediate responses were all factors in inflation, he said, as was the balance sheet of the Federal Reserve, with a deficit which had reached $33 trillion in 2023.

Fink said he was more optimistic than four years ago, because of rapid advances in healthcare, and how technology is going to shape economies and the world.

“As capitalists, as business leaders, we have a responsibility to speak a little louder today, where we see terrorism, we are watching two wars, on how to make it a better world, which is what FII is about, and figure out what is denying the world its growth,” he said.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

imogen.lillywhite@lseg.com