Blackrock CEO Larry Fink anticipates sticky inflation, but brushes off major US recession fears

Larry Fink, CEO of Blackrock, the asset management giant with over $9 trillion in assets under management (AUM), doesn’t foresee a “big recession” in the United States. Nevertheless, during an interview on Friday, Fink warned that “inflation is going to be stickier for longer” and estimated that “we’re going to have a 4ish floor in inflation.”

Inflation persistence and economic stability

In a CNBC “Squawk on the Street” interview, Fink addressed the U.S. economic landscape. Although he acknowledged some sectors are “weakening,” he emphasized that the massive fiscal stimulus package has counterbalanced these weaknesses. “I am not expecting a big recession in the [United States],” Fink stated, adding that the fiscal stimulus needs to be “offset.”

Discussing inflation, Fink suggested it will remain sticky for an extended period. He predicted a 4% inflation floor, higher than the U.S. central bank’s 2% target. As for a potential 2023 recession, Fink remained uncertain, suggesting it might occur in 2024 instead.

Addressing the recent collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank, Fink downplayed its significance, asserting that it’s “not a systemic problem” and not likely to have a widespread impact.

In mid-March, Fink shared his views on the banking industry and stricter capital standards for banks after the collapse of three banks. His recent comments align with those of Blackrock’s Chief Investment Officer of Global Fixed Income, Rick Rieder, who expects the U.S. Federal Reserve to raise the benchmark rate to 6% this year to ease inflationary pressures.

Fink also revealed that Blackrock clients are reducing risk in their portfolios, seeking a more resilient and holistic approach. He celebrated the company’s growth over the past five years, highlighting “$1.8 trillion in net inflows” and first-quarter growth surpassing that of 2022’s first quarter, despite “all this pessimism.”