Inflation is deeply entrenched in the global economy and it is uncertain whether the situation will improve soon, Goldman Sachs chief David Solomon said.
“We see inflation deeply entrenched in the economy, and what is unusual in this particular period is that both demand and supply are affected by external factors, namely the pandemic and the war in Ukraine,” Goldman’s CEO told analyst briefing following the announcement of the bank’s second quarter results.
Asked about the critical question of how long inflationary pressures will last, Mr. Solomon said that “in the conversations I have with CEOs of large companies worldwide, they are telling me that they continue to see persistent inflation in their supply chains.”
On the other hand, “our economists meanwhile say there are indications that inflation will move lower in the second half of the year. The answer is uncertain and we will all be watching it extremely carefully,” he added.
According to him, as central banks worldwide continue to tighten funding conditions to fight inflation, already volatile markets across all asset classes will remain bearish.
A key concern is that the campaign to fight inflation will begin to affect both “corporate confidence and consumer activity in the economy,” he added.
For his part, the banking giant’s CFO Dennis Coleman pointed out that Goldman has chosen to slow the pace of new hires, reduce pay and will likely bring back annual performance reviews for staff this year amid uncertainty in the economic environment.
“I expect there will be more volatility and more uncertainty and in light of the current environment we will be managing all our resources carefully,” added D. Solomon.
Source: Capital
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