BlackRock Vice Chair Hildebrand Sees Inflation Dropping 'Very, Very' Quickly — But Thinks Central Banks Won't Stop Tightening

Philipp Hildebrand, vice chairman of BlackRock Inc BLK reportedly said he expects inflation to decline rapidly and that central banks would continue on their tightening path.

“I think inflation is going to drop very, very quickly. I believe many of us will be surprised [at] how quickly it will fall ... sort of 9[%] to 4[%] will be the easy part. And then it's going to get very difficult to get inflation back to price stability. But at the moment, I think the initial phase will be a very rapid decline in inflation,” Hildebrand told Bloomberg TV on the sidelines of the Davos Summit.

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Hildebrand also said he doesn’t expect the possibility of rates to ease this year.

“I think the central banks are going to continue on their tightening path. They're going to be very careful, very focused on not losing to long-term inflation expectations anchor. I don't see any chances, frankly, of easing this year. I think the market has that wrong. So they're going to make sure that we can really not just get from 9[%] to 4[%], but also limit any kind of risks that inflation expectations become unanchored,” he said.

On Pause: Hildebrand said it's going to be very difficult to get inflation below 4%, let alone below 3% as “all of this is driven by labor market constraints,” and “principally, it's still a supply side story.” 

At best, there could be some pause, but not quite yet, Hildebrand said. “And the market may need some readjusting relative to these expectations that we could be we could be seeing some easing. And this is what we call the new regime. The Great Moderation is over,” he said.

“You know, this notion that when the economy struggles, central banks will ease. That was true in the past. I don't think it's going to be true this time,” Hildebrand added.

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