Goldman calls markets too optimistic on pace of US inflation drop -Bloomberg
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2023-06-17 23:46
Inflation in the United States will not decline as quickly as markets are currently pricing, according to a

Inflation in the United States will not decline as quickly as markets are currently pricing, according to a note from strategists at Goldman Sachs cited in a Bloomberg report on Saturday.

"Although we expect further declines in inflation going forward, markets appear considerably more optimistic than we are about the pace of cooling," the Goldman strategists wrote in the note dated on Friday, according to the Bloomberg report.

Markets are ignoring the potential for "delayed-onset inflation" in sectors such as healthcare, the strategists wrote, Bloomberg reported.

The strategists wrote that investors could be assuming that a sharp deceleration in U.S. economic growth will lead to a more rapid easing of price pressures. But the strategists, according to the Bloomberg report, saw limited chances for those factors to bring down inflation.

The U.S. Federal Reserve left interest rates unchanged on Wednesday but signaled in new projections that borrowing costs may still need to rise due to a slower inflation decline.

The Goldman strategists recommended that investors who share their viewpoint on inflation buy one-year swaps to bet on inflation realizing higher than current market pricing, according to the Bloomberg report.

(Reporting by Akanksha Khushi in Bengaluru; Editing by Will Dunham)

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