Goldman Sachs said it expects UK borrowing costs will close a gap with the US, raising its outlook for the Bank of England’s key rate to 5%.
(Bloomberg) — Goldman Sachs said it expects UK borrowing costs will close a gap with the US, raising its outlook for the Bank of England’s key rate to 5%.
Goldman economist Sven Jari Stehn now anticipates three more quarter-point increases from the BOE, continuing the quickest tightening cycle in decades.
He cited a string of stronger-than-expected data in recent weeks, with inflation, wage growth and survey data all showing the economy is holding up in the face of a cost-of-living crisis. After the BOE’s last meeting in March, he had expected rates would remain on hold at 4.25%.
“We lift our forecast for the peak in Bank Rate to 5% — almost matching our expectation for the Fed funds rate,” he wrote in a note to clients Thursday. “Another 25 basis-point hike at the May 11 meeting is very likely, paired with a significant upgrade to the MPC’s growth projection, which have turned out to be too pessimistic.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.