BlackRock CEO Larry Fink discusses inflation, ESG investing in the energy sector

BlackRock CEO Larry Fink addressed inflation issues and ESG investing in the energy sector Tuesday on "The Claman Countdown."

During a discussion with Liz Claman and Charles Gasparino, the chief executive argued "so much of the inflationary problems we're witnessing today are policy oriented." 

He noted there is a "very large" fiscal stimulus from the U.S. government and governments in Europe amid scorching hot inflation, suggesting such policies make it "much harder" for central banks to combat it.

"We have a disconnect between what policy is being proposed and what the responsibilities of these central banks are," Fink said, going on to argue it goes "beyond fiscal stimulus."

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He mentioned the U.K. withdrawing from the European Union in 2020 and the U.S. changing its legal immigration policy in recent years, among other factors. 

"We've created policies that are very inflationary," he argued.

When asked specifically about U.S. government spending, Fink said "whatever deficit reduction" that the Congressional Budget Office estimated the Inflation Reduction Act would result in has been offset by other proposals. He also said the U.S. is "technically" in a recession if one looks at "raw statistics."

He predicted the U.S. could see "three and a half" or "three and a quarter" short-term rates from the Federal Reserve. In June and July, the Fed approved back-to-back 75 basis point increases as part of its effort to bring inflation closer to its 2% goal. Another high interest rate hike is possible in September, policymakers have suggested.

Fink argued the U.S.'s worker productivity drop is "more troublesome." The Department of Labor reported in early August that nonfarm productivity declined at an annualized rate of 4.6% in the second quarter after dropping 7.4% in the first quarter.

He linked the decrease in productivity to people still working remotely and suggested more people returning to the office would raise productivity and help offset inflation. At BlackRock, he said the company would ask employees to be "more mindful of their responsibilities in the office" and that the company will be "taking a harder line" regarding how to bring workers back into the office.

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During the interview on "The Claman Countdown," Fink also discussed environmental, social and governance investing.

He said BlackRock has been "one of the largest investors in gas pipelines in the world" and noted the company has "always believed in any ESG or any energy transition" and that gas is going to play a "central role for the next 50 years." He also voiced the need for an "effective long-term transition."

"We do believe investing in infrastructure is going to be a good alternative," he said. "Investing in water, investing in gas, investing in hydrogen – these are all going to be great long-term investments for retirees."

Nuclear energy could also be a "great alternative" if "we can get around the permitting problem," the BlackRock CEO added.

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"It's going to be the balancing between moving toward more decarbonized technologies and, at the same time, making sure the transition is one of smoothness," Fink said.