Morgan Stanley CEO Ted Pick stated on Tuesday during a panel discussion of financial industry CEOs that the days of loose monetary policy and zero interest rates are long gone.

Pick stated: "The era of financial repression, zero interest rates, and zero inflation is over. Interest rates will be higher and will be challenged globally. Geopolitics is back and will be part of the challenges for decades to come," referring to Francis Fukuyama's famous book published in 1992 (The End of History and the Last Man), which discussed how conflicts between nations and ideologies had become a thing of the past with the end of the Cold War.

Since 2022, suppressed interest rates and loose monetary policy have become a thing of the past—after responding to the COVID-19 pandemic with nearly zero interest rates, the Federal Reserve raised its benchmark rate by about 500 basis points in 18 months.

Pick, when discussing the challenges facing public companies, said: "We experienced a brief stimulus from the COVID pandemic and zero interest rates, so small companies were able to go public without a complete business plan, and then we went through about 18 months of quite a difficult period when almost nothing happened."

He said at the Future Investment Initiative meeting held in Saudi Arabia: "And now it feels like a more normal rhythm, going public has become more difficult."

In September, the Federal Reserve lowered its benchmark rate by 50 basis points—its first rate cut since March 2020—marking a turning point in its management of the U.S. economy and a change in its inflation outlook.

In a report at the end of September, strategists at JP Morgan and Fitch Ratings forecast two additional rate cuts by the end of 2024, expecting such cuts to continue into 2025.

Some CEOs on Wall Street seem to disagree with this view, citing persistent inflation expectations as justification.

At a meeting of international financial institutions earlier on Tuesday, guests including the CEOs of Goldman Sachs, Carlyle Group, Morgan Stanley, Standard Chartered Bank, and State Street Bank were asked if they believed the Federal Reserve would implement two more rate cuts this year, and none of the panel members raised their hands in agreement.

Article reposted from: Jin Shi Data