Goldman Sachs on Central Banks
We expect the Fed to hold on 28th October but deliver a 25bp hike to 4-4.25% on 9th December as spot inflation remains too high, with upside inflation risks (mainly energy) that could prompt another hike in March; renewed cuts in late 2027/early 2028. The ECB likely holds on 29th October and hikes a final time to 2.75% in December, though French bond-market turbulence (likely to shave 1/4- l/2pp off annualised growth) poses downside risks to that call. We expect the MPC to hike 25bp to 4% on 5th November, with risk of further moves though 4+ priced hikes look excessive. Hikes also expected in Canada and New Zealand this week and Australia. Across the board, our strongest global view remains that central banks will deliver fewer hikes than priced.
We expect the Fed to hold on 28th October but deliver a 25bp hike to 4-4.25% on 9th December as spot inflation remains too high, with upside inflation risks (mainly energy) that could prompt another hike in March; renewed cuts in late 2027/early 2028. The ECB likely holds on 29th October and hikes a final time to 2.75% in December, though French bond-market turbulence (likely to shave 1/4- l/2pp off annualised growth) poses downside risks to that call. We expect the MPC to hike 25bp to 4% on 5th November, with risk of further moves though 4+ priced hikes look excessive. Hikes also expected in Canada and New Zealand this week and Australia.
Across the board, our strongest global view remains that central banks will deliver fewer hikes than priced.