Weekly Market Outlook

Goldman Sachs’s Cohn Calls Central Banks an ‘Ineffective Cartel’

Goldman Sachs Group Inc. President Gary Cohn called the world’s central banks an “ineffective cartel” as monetary policies have become too intertwined, causing global economic growth to stagnate.

“We no longer have independent countries with independent central banks that can drive economic growth or contract economic growth within their own countries,” Cohn, 56, said Friday during a panel discussion at the Institute of International Finance meeting in Washington. “We have a globalized world with a globalized work force and we therefore have a globalized monetary policy.”

The International Monetary Fund this week kept its estimates for worldwide growth unchanged from July and said rising political tensions over globalization are threatening to derail a recovery. The global economy will expand 3.1 percent this year before accelerating 3.4 percent in 2017, while the U.S. economy, the world’s biggest, will grow 1.6 percent this year, down 0.6 percentage point from July’s estimate, the IMF said.

“The U.S. just continues to muddle through,” said Cohn, who was joined on the panel by UBS Group AG Chief Executive Officer Sergio Ermotti and Mary Callahan Erdoes, the CEO of JPMorgan Chase & Co.’s asset-management unit. “What’s really happening in corporate America today is we’re seeing very little top-line growth.”

In Europe, the economies can’t handle higher interest rates without a “retooling of the entire economy,” said Ermotti, 56.

Erdoes, 49, said the outcome in the U.S. election probably won’t have a long-term impact on markets if history is any guide. Capital markets “tend to rebound within three to six months of any major shift,” she said.