Inflation risk remains high in 2024 due to the political landscape; however, the likelihood of a global recession is lower, said Goldman Sachs CEO and Chairman David Solomon in a new podcast episode on Goldman Sachs Exchanges.

Some of the ongoing challenges of this year include the ongoing geopolitical tension and the US presidential elections which are creating further uncertainty within the market.

“Inflation has definitely abated meaningfully, but I still think that there are headwinds. If you look at the geopolitical dynamics that can affect energy, I do think that inflation has the potential to be a little stickier than the market currently thinks.”  

Solomon added that the US Federal Reserve is conscious of inflation and that the central bank’s decision will be impacted by the ongoing political environment.  

“I think the Fed will watch the data and to the degree that the data warrants, we will see appropriate action, but I’m not quite as bullish as everyone else that we’re going to see a series of cuts this year and we’re going back to an environment of much, much lower interest rates,” he said.  

“There are still a significant number of headwinds that are going to keep interest rates higher for longer,” he explained.  

Additionally, he mentioned that global merger and acquisition activities are expected to increase in 2024 and 2025 compared to 2023. 

“People are regaining confidence, and therefore, the transaction activity, the financing, the investment, and the deal-making activities have started to pick up,” said Solomon.