Morgan Stanley CEO Ted Pick spoke at a panel of finance CEOs in Riyadh, stating that the era of easy money and zero interest rates is over. Since 2022, when the Federal Reserve began raising its benchmark rate after slashing rates to near zero during the Covid-19 pandemic, the financial landscape has shifted. Pick discussed the challenges faced by publicly-listed companies during this period of adjustment. The Fed recently announced a 50 basis point rate cut, the first reduction since March 2020, signaling a change in its approach to managing the U.S. economy and dealing with inflation.
Despite predictions from some financial institutions of additional interest rate cuts by the end of 2024 and into 2025, many CEOs on Wall Street, including those from Goldman Sachs, Carlyle, Standard Chartered, and State Street, do not believe that the Fed will implement further rate cuts this year. They cited expectations of continued inflation as a reason for their outlook.
Pick also mentioned the return of geopolitics as a challenge that will shape the financial landscape in the coming decades, referring to the 1992 book “The End of History and the Last Man” by Francis Fukuyama. Overall, the shift away from repressed rates and easy monetary policy signals a more normalized financial cadence, with higher interest rates posing new challenges for businesses and investors.
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