Former Goldman Sachs (GS.N) CEO Lloyd Blankfein said Sunday that he believes the economy is likely to be in recession as the US Federal Reserve raises interest rates to cope with rising inflation.
Speaking on CBS’s “Face the Nation”, Blankfein said the recession was a “very, very high risk factor.”
“There’s a way. It’s a narrow way,” said Blankfein, who retired from the Goldman Sachs several years ago and is now senior chairman.
“But I think the Fed has very strong tools. It’s hard to fine-tune them, and it’s hard to see their effects quickly to change that, but I think they’re responding well. It’s definitely a risk.”
Last week, Federal Reserve Chairman Jerome Powell acknowledged that rising interest rates would “include some pain”, but added that there would be worse consequences for continuing price increases.
In March, the Fed approved a quarter-percent-point rate increase. But some analysts say they fear policymakers are too far behind to curb inflation without sharply rising rates that could lead to a recession.
Blankfein told CBS he agreed with Powell’s assessment, and said there would be some “glue” to the impact of inflation now being felt in the economy.
“For individuals as a whole, and of course … for the people under the bottom quarter of the pie sharing, it’s going to be pretty tough and oppressive,” he said.
Blankfein served as CEO of Goldman Sachs from 2006 to 2018, a period that included a volatile financial crisis that led the U.S. government to implement a bank bailout program.