Goldman Sachs is forecasting an increased chance of a U.S. recession in the next 12 months, putting the odds at 35 percent following turmoil in the banking industry.

The prediction by Goldman economists jumped by 10 percentage points after the historic fall of Silicon Valley Bank earlier this month. The bank’s collapse sent shockwaves through the rest of the banking industry and sparked fears of a wider crisis.

“We are raising our subjective probability that the US economy will enter a recession in the next 12 months by 10pp to 35%, reflecting increased near-term uncertainty around the economic effects of small bank stress,” the economists, led by Jan Hatzius, said. 

Recession fears have remained prevalent in part because of the Federal Reserve’s regimen of interest rate hikes to try to rein in inflation.

Fed Chairman Jerome Powell said at a Senate hearing last week that the central bank would continue to raise interest rates if economic indicators suggested it was needed. Powell told lawmakers signs of cooling off in the economy had “partly reversed,” after jobs numbers and economic growth came in hotter than expected in the last two months.

“Data from January on employment, consumer spending, manufacturing production and inflation have partly reversed the softening trends that we’d seen in the data just a month ago,” Powell told lawmakers. “The breadth of the reversal, along with revisions to the previous quarter, suggests that inflationary pressures are running higher than expected.”

But those comments came before the collapse of Silicon Valley Bank, which was partially attributed to rising interest rates. Goldman economists said this week that they no longer expect the Fed to hand down a rate increase this month because of the stress that they have put on banks, but that they still expect increases to happen in the coming months.