Ex-Goldman CEO says recession possibility is ‘very high risk factor’

Lloyd Blankfein, CEO of Goldman Sachs, speaks on the Boston School Chief Executives Membership luncheon in Boston, MA, U.S., March 22, 2018. REUTERS/Brian Snyder

WASHINGTON, Could 15 (Reuters) – Former Goldman Sachs (GS.N) CEO Lloyd Blankfein mentioned on Sunday he believes the financial system is prone to probably going right into a recession, because the U.S. Federal Reserve continues to boost rates of interest to deal with rising inflation.

Talking on “Face the Nation” on CBS, Blankfein mentioned a recession is “a really, very excessive danger issue.”

“There is a path. It is a slim path,” mentioned Blankfein, who retired from Goldman Sachs a number of years in the past and now holds the title of senior chairman.

“However I believe the Fed has very highly effective instruments. It is laborious to finely tune them, and it is laborious to see the results of them rapidly sufficient to change it, however I believe they’re responding effectively. It is positively a danger.”

Final week, Federal Reserve Chairman Jerome Powell acknowledged that rising rates of interest will “embrace some ache,” however added {that a} far worse consequence could be for costs to proceed spiking. learn extra

In March, the Fed permitted a quarter-percentage-point price enhance. However some analysts say they worry policymakers have fallen too far behind to curb value will increase with out the kind of sharp price hikes that may trigger a recession.

Blankfein informed CBS he agrees with Powell’s evaluation, and mentioned a few of the inflationary results the financial system is enduring now shall be “sticky.”

“Total for people, and positively for people on the backside quartile of the … pie sharing, it should be fairly troublesome and oppressive,” he mentioned.

Blankfein served as CEO at Goldman Sachs from 2006 via 2018, a tenure that included the tumultuous monetary disaster that led the U.S. authorities to implement a financial institution bailout program.

Reporting by Sarah N. Lynch in Washington
Enhancing by Mary Milliken and Matthew Lewis

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