The Federal Reserve probably won’t need to keep interest rates higher for longer, Lloyd Blankfein, the former Goldman Sachs chairman and CEO, said Tuesday.
“Inflation is probably within the 3s. Let’s say you successfully get it to the high 2s,” Blankfein said Tuesday during a talk on commercial real estate and the economy. “You don’t need 5½ percent interest rates at that point, when inflation is relatively subdued.” The Fed last week also fortified a “higher for longer” stance by revising its forecast for rate cuts in 2024 to two, down from four, a move that spooked the stock market and sparked a surge in longer-dated Treasury yields.
Rising long-term bond yields can signal recession concerns, since higher benchmark borrowing costs have in the past been prone to pinching corporate profits, spurring a wave of defaults and slowing economic growth.