Morgan Stanley CEO: The era of low interest rates and "cheap money" is gone for good
Morgan Stanley CEO Ted Pick stated at a financial executive forum in Riyadh that the era of low interest rates and "cheap money" has come to an end, and global interest rates will be higher in the future, facing challenges. He mentioned that the era of financial repression and zero interest rates is history, and the market is entering a normalization phase, but the operating environment for listed companies is more difficult. Despite the 50 basis point rate cut by the Federal Reserve in September, Wall Street CEOs are cautious about future rate cuts
According to the financial news app Zhitong Finance, Morgan Stanley CEO Ted Pick stated at a financial executive forum in Riyadh on Tuesday that the era of low interest rates and "cheap money" is gone for good.
Pick mentioned in his speech, "The era of financial repression, zero interest rates, and zero inflation has come to an end. Global interest rates will be higher in the future, posing challenges. At the same time, geopolitical issues will once again become a long-term challenge for the global economy."
Since 2022, the era of low interest rates and loose monetary policy has become history. At that time, in response to the impact of the COVID-19 pandemic, the Federal Reserve lowered the benchmark interest rate to near zero. However, the Fed then rapidly raised rates by about 500 basis points within 18 months, completely ending the era of ultra-low interest rates.
Speaking of this period, Pick said, "We benefited from the COVID-19 pandemic and zero interest rates, allowing many small companies to go public even without a complete business plan. However, the market then experienced a downturn for about 18 months with almost no significant activity." He added that the market now seems to be entering a more normalized rhythm, but the operating environment has become more challenging for public companies.
In September of this year, the Federal Reserve cut the benchmark interest rate by 50 basis points, marking its first rate cut since March 2020 and signaling a shift in its approach to managing the U.S. economy and inflation outlook.
In late September, strategists from Morgan Stanley and Fitch Ratings predicted that the Fed will cut rates twice more by the end of 2024, and this rate-cutting trend will continue into 2025.
However, some CEOs on Wall Street have a different view, believing that inflation may persist and rate cuts are not set in stone.
At an international financial institution meeting held earlier on Tuesday, guests included CEOs from Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered Bank, and DBS Bank. They were asked to raise their hands if they thought the Fed would cut rates twice more this year. None of the group members raised their hands