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Goldman Sachs See No Rate Cuts Before Q4

  • Goldman Sachs write that the post-meeting statement was very brief and did not provide material guidance beyond reiterating that subsequent decisions will be based on upcoming information.
  • Villar highlighted that policy stance is now highly restrictive relative to both observed inflation and expected inflation and did not explicitly set a tentative date to begin the easing cycle.
  • The meeting, along with the unanimous vote, points to the possibility of rate cuts this year (backloaded towards 4Q2023 in their assessment).
  • Their baseline scenario is that the MPC will be patient in its calibration of monetary policy, resisting the temptation of premature easing of the policy stance given a still challenging inflationary backdrop, with headline inflation descending from a multi-decade high and core plateauing at elevated levels.
  • They see more progress as required on the ongoing macro rebalancing before kicking off the easing cycle, given a positive output gap, unmoored inflation expectations, and a narrowing yet still wide current account deficit. Accordingly, they do not expect rate cuts before 4Q2023.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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