BlackRock Inc. co-founder and CEO Larry Fink warned his firm's investors that the Federal Reserve's aggressive interest-rate hikes were the "first...
BlackRock Inc. co-founder and CEO Larry Fink warned his firm’s investors that the Federal Reserve’s aggressive interest-rate hikes were the “first domino to fall” in what could be a “slow-rolling crisis” similar to other “spectacular financial flameouts” of the past.
The Fed’s decision to hike rates “nearly 500 basis points” in response has “exposed cracks in the financial system,” Fink added. The collapse of Silicon Valley Bank , Signature Bank and Silvergate Bank were just the first taste of what could be ongoing issues at U.S. banks, even as U.S. authorities appear to have staved off contagion for now.
“We don’t know yet whether the consequences of easy money and regulatory changes will cascade throughout the U.S. regional banking sector,” Fink added. He said he expects inflation to stay closer to 3.5% to 4% during the coming years. The February consumer-price index released on Tuesday showed the year-over-year U.S. inflation rate slowed to 6% last month from 6.4% during the prior month. According to the Fed’s latest batch of economic projections released in December, the central bank expects inflation to drop to 3.1% by the end of 2023.
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