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BlackRock CEO Larry Fink Sees Potential for ‘Big Shock’ From Inflation

EconomyJun 02, 2021 12:45PM ET
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© Reuters. BlackRock CEO Larry Fink Sees Potential for ‘Big Shock’ From Inflation

(Bloomberg) -- BlackRock Inc (NYSE:BLK). Chief Executive Officer Larry Fink said that investors may be underestimating the potential for a spike in inflation.

“Most people haven’t had a forty-plus year career, and they’ve only seen declining inflation over the last 30-plus years,” Fink said at a virtual event hosted by Deutsche Bank AG (NYSE:DB) on Wednesday. “So this is going to be a pretty big shock.”

Concern about higher inflation has already seeped into U.S. markets with the cost of goods including lumber and steel rising this year. Fink began his career at First Boston Corp. in 1976, in a period of elevated inflation. The U.S. Consumer Price Index touched a high of 14.8% in March 1980.

Fink, who now runs the world’s biggest asset manager, added that central banks may have to reassess their policies if higher prices become a concern. The Federal Reserve has committed to keep rates near zero in the near term and has indicated it will tolerate inflation above its 2% target to make up for the period where it dipped below that level.

If the Fed were to reconsider that, it could seem discordant with separate fiscal stimulus, Fink said. President Joe Biden has proposed additional measures to stimulate the U.S. economy, including a $1.7 trillion infrastructure spending plan.

“That would be pretty odd, raising interest rates at the same time we do this giant fiscal stimulus,” Fink said.

Prices may also rise as companies adapt to the realities of climate change, he said. New York-based BlackRock has advocated for companies disclosing how they plan to adapt to a net zero greenhouse gas emissions economy by 2050.

“If our solution is entirely just to get a green world, we’re going to have much higher inflation, because we do not have the technology to do all this, yet,” Fink said. “That’s going to be a big policy issue going forward too: Are we going to be willing to accept more inflation if inflation is to accelerate our green footprint?”

©2021 Bloomberg L.P.

BlackRock CEO Larry Fink Sees Potential for ‘Big Shock’ From Inflation
 

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Comments (5)
Roger Pruzansky
Roger Pruzansky Jun 03, 2021 7:08AM ET
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why is it appropriate for the fed to be fuleing a housing boom buying 40bill mortgage backed securities when house sales are down and people are paying to much now
Ricardo Diogo
rcd72 Jun 03, 2021 1:32AM ET
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cheap printed money is fueling the inflation. the sooner money is valued the sooner the economy will do well, to the working middle class . bring down raw material prices from pathetic ATH. accept free trade only from country's with established working rights and compliant to pollution (CO2; NOx; SO2) abatement
Michael Chen
Michael Chen Jun 02, 2021 10:45PM ET
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Learn from Japan. Stimulus, QE, zero interest rate, deflation, raise taxes. So what is the result?
Mart Bab
Rubberduck1973 Jun 02, 2021 1:38PM ET
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Fink wants interest rates up and thinks he can influence or scare the FED. “Are we going to be willing to accept more inflation if inflation is to accelerate our green footprint?” We are going to either accept inflation or consume less. Both good for green and bad for business.
Joel Hauser
Joel Hauser Jun 02, 2021 1:09PM ET
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Inflation is good and it is an effective population control,for years people who don't deserve have been getting products at a very affordable rates thanks to cheap manufacturing in asia.Braind3ad consumerism promoted by republicans since nixon days is why we are here.
Chris Hall
Chris Hall Jun 02, 2021 1:09PM ET
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guess you forgot how the stagnet income has been for decades and the fact that middle class is non existent
 
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