Blackstone’s Gray Sees Growth Slowing in Inflation Fight

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(Bloomberg) — Blackstone Inc. President Jon Gray said economic growth will slow as stubborn inflation weighs on the Federal Reserve’s ability to begin lowering borrowing costs.

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“We see a deceleration of growth,” Gray said at the Macquarie Australia Conference in Sydney on Thursday. “Central banks will be slow on the cutting of rates, because they don’t want to see a rise of inflation,” he said. “The Fed will be patient, they’ll have the opportunity to cut once this year,” he added.

Markets are reassessing the trajectory for the economy as Fed policymakers indicate the two-decade high US rates may need to be maintained for longer than previously thought in order to reduce price pressures. Fed Chair Jerome Powell last week said more work was needed to gain confidence that inflation was returning to the 2% target in order to cut rates.

Gray said his growth expectations were “lower than consensus,” explaining he saw “not a cliff but a sequential deceleration of growth and inflation continuing to come down, but at a slower pace.”

Nevertheless, restrictive rates and the slowdown it puts on dealmaking typically presents good buying opportunities, Gray said.

“For us as a firm, we’re saying before central banks really start cutting rates, can we invest before that all-clear sign and before people are feeling a little more comfortable? So you see from us an acceleration of our deployment,” he added.

Blackstone has grown into a powerhouse that touches many aspects of the economy, lending to businesses and financing infrastructure projects. Its assets hit $1 trillion last year, making it the world’s largest publicly traded alternative asset manager.

(Updates with comment on the economy and fund deployment from fourth paragraph)

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