Goldman Sachs’ chief operating officer warns inflation poses the greatest risk to growth as PCE data hits a three-year high.
Goldman Sachs COO John Waldron identified inflation as the primary economic risk, citing its potential to drive up long-term interest rates and alter consumer behavior. His remarks followed April’s Personal Consumption Expenditures index release, which showed the highest inflation reading in three years.
Traders are now pricing a 50.5% chance of a Federal Reserve rate hike this year, up from earlier expectations. Concerns persist over whether current rates are sufficient to curb inflation, particularly as AI-driven infrastructure spending continues to fuel economic activity.
Market sentiment has shifted as bond yields signal uncertainty, with economists warning that rate increases may not yet be slowing inflation. The Fed’s next moves remain under scrutiny as inflation pressures mount.