World’s biggest sovereign wealth fund warns markets at risk from tariff-fueled inflation

Rate-driven inflation is among the market’s biggest risks in 2025, Nicolai Tangen, head of the world’s largest sovereign wealth fund, said on Tuesday.

“I don’t think I’m giving advice to the United States, but if you look at the risk for the financial markets, I think inflation is definitely, everything is driven by tariffs,” the CEO of Norges Bank Investment Management told CNBC at CNBC. the World Economic Forum in Davos.

“Many of the suggestions that are now coming from the United States are potentially inflationary. They could cause more inflation. There could be less labor supply, there could be more tariffs – all these things drive inflation, and so it is not a given that the inflation. will go down,” he said.

The world’s political leaders are nervously waiting to see what trade policies The new president of the United States, Donald Trump, has to do it, after months of strong rhetoric.

Trump said on Monday that he was considering the implementation of tariffs of 25% on Mexico and Canadatwo of the largest trading partners of the United States, just at the beginning of February. He has first threatened 50%-60% tariffs on Chinese products, and duties on imports from the European Union unless the bloc increases its purchases of US oil and gas.

Tangen of Norges Bank also pointed out the main risks for the markets, including higher for longer interest rates, high levels of government debt and geopolitical tensions. As his biggest risk, he cited the concentration in US stocks among large capitalization technology companies, which he said had “never been greater”.

However, he said that “purely financially,” for many American companies, Trump’s arrival was “very positive.”

“A lot of these policies we don’t necessarily agree with, but if we just look at it from a financial point of view, as a financial investor, it’s generally very exciting. You know, we have more than half of the assets invested in America. And when we talk to American CEOs, and we talk to a lot of them, we really see this animal spirit coming back.”

Tangen leads Norway’s mammoth sovereign wealth fund, which posted first half profit of 1.48 trillion kroner ($138 billion) last year, mainly driven by investments in technology stocks.