VIEW: GS: Inflation Surprises Meaningfully; Now Exp. BoE To Keep Bank Rate Unch. Tomorrow

Goldman Sachs note that “the August inflation print surprised meaningfully to the downside, particularly on core and services inflation.”

• “In seasonally adjusted month-over-month terms, we estimate that core inflation declined meaningfully to 0.08% (from 0.51% last month), on the back of a broad-based moderation across core goods and services.”
• “Following today's release, we update our UK inflation forecast and now expect core and headline inflation to be 5.5%yoy (vs 6.0%yoy previously) and 4.4%yoy (vs 4.7%yoy previously), respectively, by end-2023.”
• “With today's data, two out of the three indicators that the MPC has set out to monitor inflation persistence have now shown notably more progress than anticipated since the August meeting. Combined with their recent dovish commentary, we now expect the MPC to keep Bank Rate unchanged tomorrow and lower our forecast for the terminal policy rate to 5.25% (from 5.50% before).”