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Goldman Sachs on BCRP Decision – Expect Another 50Bp Hike

  • GS expect the MPC to deliver another 50bp hike, driving the policy rate to a still accommodative 3.00% (ex-ante policy rate still negative). Prior to the reading of 6.43% annual inflation, GS highlighted the December inflation print as a relevant data release ahead of the BCRP meeting.
  • Despite the somewhat dovish guidance in the last meetings, in their view robust annual growth and the high current (5.66% in November) and expected inflation support the call for another 50bp hike.
  • In their assessment, additional rate hikes and a frontloaded path toward monetary policy normalization are warranted given the deterioration of current and prospective inflation and the heightened policy and political uncertainty and risk.
  • Furthermore, the ex-ante real policy rate has remained considerably negative and therefore, an additional 50bp rise to 3.00% will still maintain an accommodative/expansionary monetary stance in the coming months.

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