As the 2025 presidential election looms, Wall Street's top figures are more concerned about the stubborn nature of inflation than the identity of the next occupant of the Oval Office. Prominent CEOs from BlackRock, Citadel, Blackstone, Apollo, Carlyle, Citigroup, Goldman Sachs, Morgan Stanley, and State Street have all expressed their worries about the deeply entrenched inflationary pressures in the global economy, signaling that interest rates may not come down as quickly as the market expects.

Inflation Trumps Politics for Wall Street Heavyweights

Inflation Concerns Overshadow Election Speculation

While the race for the 2025 presidency remains a topic of discussion, the finance leaders gathered at the Future Investment Initiative in Saudi Arabia were largely unwilling to make bold predictions about the outcome. Citadel CEO Ken Griffin acknowledged that Donald Trump is the favorite, but described the contest as "almost a coin toss." Blackstone CEO Stephen Schwarzman, a Trump supporter, admitted he was unsure of the winner, but noted that the former president "has a much better base of knowledge of how that job works" compared to 2016. Apollo CEO Marc Rowan suggested that a Trump victory could lead to an uptick in mergers and acquisitions. However, the overriding concern among these Wall Street titans was not the political landscape, but rather the persistent nature of inflation.

Inflation Seen as More Deeply Rooted than Widely Believed

BlackRock CEO Larry Fink warned that the world is facing "greater embedded inflation" than ever before, questioning whether the cost of taming it is being adequately considered. This sentiment was echoed by other finance leaders, who expressed skepticism about the Federal Reserve's ability to quickly bring down interest rates. When asked if they expected the Fed to cut rates by a further 50 basis points this year, not a single CEO on the panel raised their hand. Goldman Sachs CEO David Solomon cautioned that inflation may be "more embedded in the global economy than the current narrative," suggesting the potential for a more prolonged and challenging battle against rising prices.

Concerns over Government Spending and Its Inflationary Impact

Part of the Wall Street executives' unease stems from their belief that government spending under either a Harris or Trump administration is likely to continue rising, potentially fueling further inflationary pressures. Both the vice president's and the former president's proposed economic policies are projected to add trillions to the national debt, according to the nonpartisan Committee for a Responsible Federal Budget. Carlyle CEO Harvey Schwartz noted that the economy is facing "significant deficits" despite "strong economic conditions," while Apollo's Marc Rowan cited the government's increased defense production and recent legislative actions as examples of "stimulative" and "inflating" measures.

Cautious Optimism Amid Lingering Geopolitical Tensions

The finance leaders' concerns about inflation come against a backdrop of improved economic conditions compared to a year ago. At last year's Future Investment Initiative, many of the same CEOs were more pessimistic about the global economy's near-term future, as they grappled with the impact of high interest rates and a deteriorating geopolitical environment. While conflicts in the Middle East and Ukraine continue, the stocks of major banks, asset managers, and private equity firms have all risen by at least 40% over the past year. State Street CEO Ron O'Hanley acknowledged the "good news" that the dire predictions of a global recession have largely been avoided, but the underlying inflationary pressures remain a source of unease for Wall Street's top figures.