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GS New Rate Call Post CPI


Following the beat in CPI, broader signs of overheating risk and the resilience in their GS FCI, Goldman yesterday increased their BOC rate call from 4 to 6x25bp hikes in 2022, before a further 4 in 2023 sees a terminal 2.75%.

  • GS point to the above consensus headline of +5.1% Y/Y, average core inflation of 3.2% Y/Y being the highest since 1991 and their own core measure accelerating in trend terms from 2.6% to 3.4% (3mth annualized) to its highest since Aug 2021.
  • They now expect the BoC to hike six times in 2022 (vs. four hikes in 2022 previously). This comes from 25bp hikes in each of the next six meetings up to and including Oct, taking the rate to 1.75%, after which a quarterly pace delivers four hikes in 2023 to a terminal 2.75%.
  • They continue to expect balance sheet run-off to begin in June.

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