Larry Fink, the CEO of BlackRock Inc. ( BLK ), has projected that the U.S. Federal Reserve will not reduce interest rates as significantly as the market anticipates, citing high “embedded inflation.”

What Happened: Speaking at a CEO-packed panel in Riyadh, Saudi Arabia, Fink, who manages a colossal fund of over $10 trillion, forecasted only one rate reduction by the end of 2024, contrary to the two reductions predicted by other market players, reported CNBC.

“I think it’s fair to say we’re going to have at least a 25 (basis-point cut), but, that being said, I do believe we have greater embedded inflation in the world than we’ve ever seen,” Fink stated.

He attributed this inflation to government and policy decisions, such as the U.S.’s recent efforts to reduce reliance on foreign supply chains and invest in domestic jobs.

These changes, facilitated by the President Joe Biden administration’s legislation, can lead to higher prices for goods, as American workers are paid more than those in many offshore manufacturing destinations like China.

“Today, I think we have governmental policies that are embedded inflationary, and, with that being said, we’re not gonna see interest rates as low as people are forecasting,” Fink added.

The Fed reduced its benchmark rate by 50 basis points in September, signaling a shift in its management of the U.S. economy and its inflation outlook. Despite this, Fink believes that the Fed will not cut rates as extensively as expected.

See Also: Is S&P 500 Headed For A Lost Decade? Analysts Say ‘We May Have Forgotten About Dividends’

Why It Matters: The Fed’s interest rate decisions have been a hot topic of debate in recent months. Former President Donald Trump‘s economic adviser Kevin Hassett defended the central bank’s rate cut, citing a weakening jobs market.

On the other hand, former Federal Deposit Insurance Corporation Chief Sheila Bair warned against further rate cuts, despite the economy showing positive signs such as increasing wages, a strong stock market, and robust job creation.

Meanwhile, Federal Reserve Governor Adriana Kugler expressed her support for additional interest rate cuts, contingent on continued decreases in inflation. This announcement was made during her speech at the European Central Bank.

On a global scale, the European Central Bank cut interest rates for the third time in a year to stimulate a sluggish economy, shifting its focus from battling inflation to encouraging economic growth.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote