Major CEOs on Wall Street believe that there is sustained inflationary pressure in the US economy, and they do not believe that the Federal Reserve will continue its accommodative policy path, meaning there will be two more interest rate cuts later this year.

In September, the Federal Reserve cut the benchmark interest rate by 50 basis points, indicating a turning point in its management of the US economy and its outlook on inflation. In late September, strategists from JPMorgan and Fitch Ratings predicted that the Fed will cut rates twice by the end of 2024 and expect such cuts to continue until 2025.

The FedWatch tool from the CME Group shows a 98% chance of a 25 basis point rate cut at the November meeting this week, and a 78% chance of another 25 basis point cut at the December meeting.

However, some CEOs seem skeptical. Last week at the high-profile economic conference 'Future Investment Initiative' in Saudi Arabia, they suggested that the US could experience more inflation due to the country's economic activity and the policies of both presidential candidates, which could lead to inflation and stimulate the economy—such as increased public spending, reshoring manufacturing, and tariffs.

During an international financial institution seminar hosted by CNBC's Sara Eisen, CEOs of major Wall Street banks including Goldman Sachs, The Carlyle Group, Morgan Stanley, Standard Chartered Bank, and State Street were asked if they believed the Federal Reserve would cut rates twice more this year, with no one raising their hand.

Franklin Templeton's President and CEO Jenny Johnson expressed in a recent CNBC interview last Wednesday that she believes the Fed will only cut rates once more this year. 'I think inflation is more sticky, to be honest, look at the US employment and wage reports, I think it's hard to bring the inflation rate down to 2%.

"Remember a year ago, we were all talking about an economic recession here, right? And now? No one is talking about an economic recession anymore,'" she said.

Founded by Larry Fink, BlackRock manages over $10 trillion in assets, and he also believes that the Fed will only cut interest rates one more time by the end of 2024.

Fink stated at another group meeting last week: "I think, fairly, that the Fed will cut rates by at least another 25 basis points. However, I do believe that global hidden inflation is more severe than ever before."

According to the data from the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI), a key inflation indicator, rose by 2.4% year-on-year in September. This figure is slightly lower than the 2.5% in August, indicating a slowdown in price growth, and the slowest year-on-year growth rate since February 2021.

Last Friday, the latest data showed that U.S. job growth slowed to the lowest level since the end of 2020 in October. However, the market largely ignored these bad news as the report was distorted by hurricanes and strike actions.

Goldman Sachs CEO David Solomon stated that inflation will be more deeply embedded in the global economy than what market participants currently predict, which means inflation could be stickier than commonly believed by the market.

"This does not mean inflation will rear its head in an especially ugly way, but I do believe, given the policy actions taken by the Fed, it may be more resistant than the current market consensus," he said.

Morgan Stanley CEO Ted Pick went further, declaring last Tuesday that the days of loose money and zero interest rates are gone for good.

"Financial repression, zero interest rates, and zero inflation era are over. Rates will be higher, and everyone globally will face challenges. Geopolitics are back and will be part of the challenges for decades to come,​" Pick said. He referenced Francis Fukuyama's famous 1992 published work, "The End of History and the Last Man," which suggested that with the end of the Cold War, conflicts between nations and ideologies had become a thing of the past.

Apollo Global CEO Marc Rowan questioned why the Federal Reserve lowered interest rates when so many fiscal stimulus measures were supporting the seemingly healthy US economy, during a panel discussion hosted by Eisen. He mentioned the US Inflation Reduction Act and the CHIPS and Science Act, as well as the increase in defense production.

Editor/Rocky