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Goldman Sachs CEO David Solomon said Monday that inflation is “deeply entrenched” in the global economy, and it’s unclear whether that will change this year. 

“We see inflation deeply entrenched in the economy, and what’s unusual about this particular period is that both demand and supply are being affected by exogenous events, namely the pandemic and the war on Ukraine,” Solomon told analysts during a call to discuss second-quarter results.

Solomon then pointed to one of the most critical debates occurring in markets right now: It is known that inflation is at multidecade highs; but how long will it persist?

“My dialogue with CEOs operating big global businesses, they tell me that they continue to see persistent inflation in their supply chains,” Solomon said. “Our economists meanwhile say there are signs that inflation will move lower in the second half of the year. The answer is uncertain and we will all be watching it very closely.”

As central banks globally continue to tighten financial conditions to tame inflation, already volatile markets across asset classes will remain choppy, he said.

The uncertainty has Solomon operating his New York-based bank cautiously, including by examining its spending plans. The firm has opted to slow its rate of new hires, cut the professional fees it pays and will likely reinstate annual performance reviews for staff this year, according to CFO Denis Coleman.

“I expect there’s going to be more volatility and there’s going to be more uncertainty and in light of the current environment we will manage all our resources cautiously,” Solomon said.