June 08, 2022 19:25 GMT
Goldman Sachs on Thursday’s BCRP Decision
- Goldman Sachs expect the MPC to deliver another 50bp hike, driving the policy rate to 5.50%. This would be the eleventh rate increase this cycle and tenth consecutive 50bp hike.
- All in all, in their assessment, the outlook for inflation remains challenging and inflation expectations have deteriorated further. In the May central bank’s survey, economists’ inflation expectations for end-2022 and end-2023 rose by +50bp and +60bp, each to 6.0% and 3.8%, respectively.
- Additionally, political uncertainty and risk remain significant and the sizeable increase in the minimum wage and another round of pension fund withdrawals could increase inflationary pressures.
- Furthermore, the fact that the real ex-ante policy rate remains low, given the rise in inflation expectations, support the case for continued rate hikes in future meetings.