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Goldman Sachs on Inflation and Monetary Policy Outlook

  • Headline inflation decreased in November, from +17.9% Y/Y to +17.4% Y/Y, surprising consensus expectations significantly to the downside (consensus: +18.0% Y/Y, GS: +18.3% Y/Y).
  • Relative to Goldman’s forecast, the main driver of the downside surprise was much more benign household energy inflation. The print suggests that the inflationary impact from non-core factors (ex. tax support measures) is nearing its peak. By contrast, Goldman estimate that core inflation increased further on the month, rising by 0.4pp to +11.4% Y/Y.
  • The downside surprise will likely support the NBP's relatively dovish guidance for rate stability. Goldman nevertheless remain concerned about core and underlying inflation dynamics, which they think at this stage reflect an ongoing de-anchoring of inflation expectations, and think warrants further tightening.

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