BlackRock CEO: U.S. nationalist policies will push up inflation

BlackRock Inc. chief executive Larry Fink warned about U.S. inflation, which is likely to remain high in the coming months. While he did not provide a specific forecast for rising inflation over the next six to nine months, his recent comments suggest that he believes inflationary pressures will persist.

Speaking at the CERAWeek conference in Houston, Fink singled out that the Trump administration's policies, such as mass deportations of immigrants and high tariffs, could lead to labor shortages and rising import costs, exacerbating inflationary pressures. Fink said the market may be underestimating inflation risks at the moment and expects costs to rise further over the next six to nine months.

Fink noted that mass deportations of immigrants could affect the agricultural sector, and labor shortages could push up agricultural prices. He also mentioned that high tariffs could increase the cost of imported goods, further exacerbating inflation. He stressed that these policies may have an interactive impact with the implementation of artificial intelligence (AI) technologies, and that labor shortages may hinder the construction and maintenance of AI infrastructure, thereby driving up the associated costs.

Current economy

According to the Bureau of Labor Statistics (BLS), the latest inflation data for the United States shows that inflation was 3% as of January 2025, up slightly from 2.9% in December 2024.

The Federal Reserve (Fed) kept interest rates unchanged at its January 29, 2025 meeting, ranging from 4.25% to 4.50%, reflecting continued concerns about inflation. The Fed notes that inflation remains "slightly higher" and is committed to its long-term 2% inflation target.

Fink's views on inflation have also influenced his predictions of a rate cut by the Federal Reserve. He believes that the central bank will not cut interest rates as aggressively as some market participants expected, and high inflation expectations are one of the key considerations. The stance reflects his broader concern that inflationary pressures are not fading as quickly as some investors would like.

Fink's comments on inflation come as financial markets keep a close eye on economic indicators for signs of persistent price pressures. Despite recent data showing that inflation has eased, many experts remain cautious that official measures such as the Consumer Price Index (CPI) may not adequately reflect the real cost of living that consumers are facing.

Fink's warning that the market may underestimate inflation risks is an important signal for investors. Higher inflation could cause the Fed to adjust interest rates more cautiously, affecting bond yields and stock valuations. In particular, energy and agriculture-related industries are likely to face greater cost pressures, impacting corporate profits and return on investment.

Fink also mentioned at the CERAWeek conference that artificial intelligence (AI) may change the labor market, but labor shortages may become a barrier to the implementation of AI technology. He pointed out that AI data center construction requires a large number of skilled workers, such as electricians, and if there is a labor shortage, the cost may rise further. This view expands on traditional inflation discussions, highlighting the complex relationship between technological progress and policy decisions.

In addition, Fink at the Davos forum in January predicted the potential for bitcoin to soar in value amid persistent inflation concerns, suggesting that it could become a store of value asset in times of economic uncertainty, and that "cryptocurrencies are a safe haven against inflation" and that as adoption continues to climb, if sovereign wealth funds allocate 2% to 5% of their assets to bitcoin, bitcoin could skyrocket several times and even challenge the high of $700,000. This highlights the wide-ranging impact of inflationary pressures on investment strategies and asset valuations.