GS Crook GS Morning 25 Aug 2026

GS Crook - GS Morning NBH Preview Markets Macro Brazil BoJ 25 Aug 2026 Crook · Goldman Sachs · Managing Director, FICC & Equities Tue 25 Aug 2026, 4:35am ET

Highlights from GS Research, Sales and Trading: 1) NBH Preview, 2) Tony P. on Markets/Macro, 3) Brazil Trade Idea and 4) BoJ Policy Rate Forecast Revisions

BOTTOM LINE: Expect a cut of 25bp to +5.50%. Following July’s MPC meeting, the Bank continued to strike an explicitly dovish stance, with Governor Mihály Varga reiterating his earlier guidance for the cutting cycle to continue throughout the summer and that the MNB will "revisit the question of the rate path in September". The recent developments in consumer prices have all but solidified the move.

Why has inflation been so weak? We largely attribute this to the significant appreciation of the Forint, both before and after the April 12 election. Food inflation, which has a large FX component, was one of the key drivers of the downside surprise in July. The 'wage-sensitive' category is where inflation remains the highest; this is more domestically determined inflation and has historically been higher than other slices of inflation (see for example in 2016-2020). We have argued before that because domestic inflation has historically and structurally been higher, a stronger FX is needed to reach a lower inflation target on aggregate (that is, to have FX-sensitive inflation undershooting the target). But in the very last print, this component also fell materially, so that has also been part of the recent story. But the majority of it has still been FX.

CHART 1: Other Services Inflation Increased, Contrary to Core Goods and Personal Services

Thoughts from the Floor: EM RATES TRADING (DELL): The market is priced for a 25bp cut this week then a further cut by year end. Price action remains weak however as energy prices are proving sticky and concerns around food prices into next year and a weak fixed income backdrop dominate. Positioning is now somewhat lighter but CTAs continue to pay and the summer liquidity means we are not seeing fresh receivers. We remain constructive on the outlook for HUF assets going forward, but believe we will see better levels to engage. Don’t expect any guidance for the September meeting today. Instead, think they will wait for the updated forecasts.

CEEMEA ECONOMICS (DALY): Looking beyond the short term, believe that the outlook for Hungarian rates is dovish. The Tisza government aims to meet the Maastricht criteria by 2030 and has committed to Euro adoption – a prospect we believe is realistic. A necessary early step towards meeting the criteria will be to lower the inflation target from +3.0%yoy to the Euro area’s +2.0%yoy. As this is likely to occur before the end of the year, we revised our estimate of the neutral policy rate from +4.00% to +3.00% (significantly below market pricing). While a lower inflation target implies a lower neutral policy rate in the long term, it also implies a more cautious path for monetary policy in the short term. Despite this, we