Services inflation is key to Goldman Sachs view of more rate hikes ahead. Earlier this week we had data showing:
That 10.7% headline rate is under Bank of England forecast, a good sign at the margin. But, services sector inflation is steady at the same rate as the previous month, at a 30-year high of 6.3%.
Says Goldman Sachs Asset Management:
- Wage growth, a key determinant of services inflation, is around 6%, double the level estimated to be consistent with the Bank's 2% inflation target
- We think the Bank will opt for further hikes in the first half of 2023, until inflation shows less momentum
Bank of England Governor Bailey
