<p style=““ class=“text-align-justify“>Citi last week said that UK inflation was set to peak at 18.6% in January and now we are seeing Goldman Sachs top that estimate, as the firm argues that we may see inflation spiral to over 20% early next year in the UK.</p><p style=““ class=“text-align-justify“>“In a scenario where gas prices remain elevated at current levels, we would expect the price cap to increase by over 80% in January (vs 19% assumed in our baseline). This would imply headline inflation peaking at 22.4%, well above our baseline forecast of 14.8%.“</p><p style=““ class=“text-align-justify“>The firm also says that they expect a recession to begin in Q4 this year, with the economy set to contract by 0.6% next year. As for the BOE outlook, they see policymakers raising the bank rate by 50 bps to 2.25% next month but notes that there are upside risks to its forecasts for additional 25 bps rate hikes in subsequent meetings.</p>

This article was written by Justin Low at www.forexlive.com.