Goldman Sachs more concerned about inflation than about COVID-19 – Community News

Goldman Sachs more concerned about inflation than about COVID-19

Goldman Sachs GS,
CEO David Solomon said on Tuesday that monetary policy is likely to have a bigger impact on markets than the pandemic as central banks around the world take steps to tackle inflation. While flare-ups like the omicron variant could rage markets in the near term, Goldman Sachs expects the economy to continue its recovery in 2022 and beyond, Solomon told CNBC. Solomon said it is unlikely that the double-digit percentage in the S&P 500 SPX,
over the past three years will become the norm in the coming years. “I’m not convinced that double-digit stock returns compounding perpetually are something you should expect as an investor,” he said. Monetary and fiscal policy remains critical amid market jitters over inflation and the US Federal Reserve’s monetary policy, he said. “We’ve had unprecedented monetary and fiscal policies for a meaningful time and we’re going to come out of that and unwind that,” said Solomon. “That’s going to have a big impact on asset prices, market activity and a variety of things. There’s going to be an impact on things as we wind it up and hit the balance.” Looking ahead, the big unknown is whether monetary policymakers can ease inflationary pressures without sending markets plummeting. “What we don’t have an answer for is whether that can be done in a smooth way where we get a little bit of air out without a lot of bumps and volatility, or do we get some bumps and volatility along the way?” said Solomon. Solomon’s comments came as bankers gathered for the Goldman Sachs Financial Services Conference. Wells Fargo WFC,
CEO Charlie Scharf urged the Fed to act faster to contain inflation. “Inflation is very, very real,” Scharf said, as reported by Reuters. “Prices are significantly higher for inputs in most sectors. The labor shortage and wage increases are extremely real. Whether that lasts for several years is not that relevant, but it will certainly have an impact in the next year or so.”