In a significant development a former CEO of Goldman Sachs, Lloyd Blankfein said, he believes the US economy is at risk of slipping into a recession, even as the U.S. Federal Reserve continues to tackle inflation by hiking interest rates.
Blankfein made the comments which speaking on CBS “Face the Nation”. He said, a recession is “a very, very high risk factor.”
“There’s a path. It’s a narrow path,” said Blankfein. “But I think the Fed has very powerful tools. It’s hard to finely tune them, and it’s hard to see the effects of them quickly enough to alter it, but I think they’re responding well. It’s definitely a risk.”
Last week, Jerome Powell, the chairman of the Federal Reserve had acknowledged that increasing interest rates will “include some pain,” but that is a better outcome than continued rises of prices, which is spiking the cost of living.
Earlier in March, the Federal Reserve had approved a quarter-percentage-point rate increase, with analysts opining that policymakers have fallen too far behind to curb price hikes without the sort of sharp rate hikes that might cause a recession.
He told CBS that he agrees with Powell’s assessment, that some of the inflationary effects of the economy will be enduring and will be “sticky.”
“Overall for individuals, and certainly for individuals at the bottom quartile of the … pie sharing, it’s going to be quite difficult and oppressive,” he said.