Wall Street executives are expressing doubts about the Federal Reserve's easing strategy.

• The U.S. Bureau of Labor Statistics reported that America's consumer price index, a crucial inflation indicator, increased by 2.4% in September 2023 compared to the same month in 2022.
• In October, the pace of U.S. job creation slowed to its weakest point since late 2020, as shown by new data released on Friday.
• The nonfarm payrolls report indicated acute climate and labor disruptions, but markets largely ignored the bad news.

Inflation pressures in the U.S. economy are ongoing, and major Wall Street CEOs are not convinced that the Federal Reserve will continue its rate-easing path with two more reductions this year.

The Fed cut its benchmark rate by 50 basis points in September, signaling a turning point in its management of the U.S. economy and its outlook for inflation. According to reports from strategists at J.P. Morgan and Fitch Ratings in late-September, they predicted two additional interest rate trims by the end of 2024 and expect such reductions to continue into 2025.

The probability of a 25-basis-point cut at the November meeting is 98%, while the probability of a 25-basis-point cut at the December meeting is 78%.

Some CEOs expressed doubts about the future of the US economy, citing concerns about inflation, which they believe will be exacerbated by the nation's economic activity and the policies of both presidential candidates, including public spending, onshoring of manufacturing, and tariffs.

The panel moderated by CNBC's Sara Eisen, featuring CEOs from Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered, and State Street, was asked to raise their hands if they believed the Fed would implement two additional rate cuts this year.

No one put their hand up.

According to Jenny Johnson, Franklin Templeton president and CEO, who spoke to CNBC on Wednesday, she believes that inflation is stickier and it will be challenging for it to drop to the 2% level, despite the kind of jobs and wage reports in the U.S. She predicts that only one more interest rate cut will occur this year.

"A year ago, we were all gathered discussing the possibility of a recession. Now, the topic of recession has been silenced," she remarked.

Larry Fink, head of BlackRock, predicts one rate reduction before the end of 2024.

Fink stated at a recent FII panel that while he believes we will have at least a 25 basis-point cut, he also thinks we have greater embedded inflation in the world than we've ever seen.

Our government and policies are more inflationary, and we have not considered the cost of our immigration policies. Historically, we were a consumer-driven economy, where the cheapest products were the best, and the most progressive way of politicking.

In September 2023, the U.S. Bureau of Labor Statistics reported that America's consumer price index, a crucial inflation indicator, increased by 2.4% compared to the same month in 2022. This figure represents a slight decrease from the 2.5% increase recorded in August, indicating a slowdown in price growth. Additionally, the September reading was the smallest annual increase since February 2021.

In October, the U.S. job creation rate slowed to its weakest pace since late 2020, but markets largely ignored the bad news as the nonfarm payrolls report flagged acute climate and labor disruptions.

David Solomon, CEO of Goldman Sachs, stated that inflation is more deeply entrenched in the global economy than what market participants currently predict, implying that price increases may be more persistent than the consensus.

He stated that although it's unlikely that the issue will manifest in an unpleasant manner, there is a possibility that it could become a hindrance, depending on the policies implemented.

Last Tuesday, Ted Pick, CEO of Morgan Stanley, declared that the era of easy money and zero-interest rates has ended.

The era of financial repression, characterized by zero interest rates and zero inflation, has ended. Interest rates will rise and be challenged globally. Additionally, the end of the idea that geopolitics are irrelevant, as argued in Francis Fukuyama's 1992 book "The End of History and the Last Man," is over, and geopolitical challenges will persist for decades to come.

During Sara Eisen's panel on Tuesday, Apollo Global CEO Marc Rowan raised a question about the Fed's decision to cut rates, given the substantial fiscal stimulus that had already boosted a robust U.S. economy. He pointed to the U.S. Inflation Reduction Act, the CHIPS and Science Act, and an increase in defense production as evidence of the economy's strength.

"In the U.S., we're discussing various shades of good. Despite increasing rates, the stock market is at a record high, there's no unemployment, and the capital market is issuing at will. We're also stimulating the economy," he stated.

He later added that he was trying to recall the reason for cutting rates, other than to equalize the bottom quartile.