Top Wall Street execs are getting skeptical on the Fed's easing path

RIYADH, Saudi Arabia — Major Wall Street CEOs see ongoing inflation pressures in the U.S. economy and aren't convinced that the Federal Reserve will continue its rate-easing path with a further two reductions this year.

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

The CME Group's FedWatch tool puts the probability of a 25 basis point cut at this week's November meeting at 98%. The current probability of the benchmark rate being taken down by another 25 basis points at the December meeting is 78%.

But some CEOs appear skeptical. Speaking last week at Saudi Arabia's showcase economic conference, the Future Investment Initiative, they see more inflation on the horizon for the U.S., as the nation's economic activity and both presidential candidates' policies involve developments that will potentially be inflationary and stimulatory — such as public spending, the onshoring of manufacturing and tariffs.

A group of CEOs speaking at an FII panel moderated by CNBC's Sara Eisen — which included Wall Street hegemons such as the bosses of Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered and State Street — were asked to raise their hand if they thought two additional rate cuts would be implemented by the Fed this year.

No one put their hand up.

"I think inflation is stickier, honestly, you look at the kind of jobs report and the wage reports in the U.S., I think it's going to be hard for inflation to come down to the 2% level,"