FREELAND: CANADA WON'T ESCALATE OR BACK DOWN ON US TRADE FIGHT

MNI: PBOC To Aim To Drive Inflation Higher- Advisors

MNI: China To Issue More Bonds As Stimulus Targets Consumption

MNI: PBOC To Aim To Drive Inflation Higher- Advisors

MNI: China To Issue More Bonds As Stimulus Targets Consumption

MNI BRIEF: China Nov M1 Decline Narrows, M2 Slows

EZ/UK T-Bill Calendar: 8/13/28/50-Week BTF Auction on Monday

EZ/UK Bond Supply Calendar: 4.125% Jul-29 Gilt Due on Tuesday

MNI: CANADA OCT WHOLESALE SALES +3.3%; EX-AUTOS +0.5%

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

SocGen: Risks To 9.5% Terminal BanRep Rate Forecast Remain To Upside

COLOMBIA
  • The BCCh is likely to tighten its overnight rate by 75bp to 9.0% in June. In SocGen’s baseline scenario, they see monetary tightening continuing in July, with the overnight rate peaking at 9.5%. Risks to their forecast are still high to the upside.
  • The BCCh promised to re-evaluate its monetary policy trajectory at its last meeting. The BCCh has tightened its monetary policy rate by 775bp (to 8.25%) since the beginning of the tightening cycle in July last year. At its last policy meeting, the central bank said that the inflation (in March-April) exceeding March forecasts intensified the risks, bringing it “to raise the MPR to around the upper bound of the policy rate corridor of the last MP Report.” At the same time, BCCh pledged to evaluate the monetary policy trajectory in its next report (due in June).
  • With inflation rising to 10.5% in April (core inflation at 8.3%) and likely to increase further this quarter, the inflation outlook for 2H22 is still highly uncertain –although SocGen expect moderation in their baseline scenario– and with inflation expectations for 2023 significantly above the central bank’s target, SG can’t see it sticking tooth and nail to its forward guidance.
  • As a result, they don’t see why the central bank would stop tightening until it sees inflation beginning to fall and expect it to tighten by 75bp in June and a final 50bp in July before concluding the tightening cycle. The upside risks remain (both for the June meeting and the terminal rate forecast) given the inflation uncertainties in the near term. The consensus expects rate cuts to begin in 4Q22, which compares with SocGen’s call for easing to begin in 1Q23.
  • Still, there is not much to choose from between these two calls given the still-fluid inflation outlook. Chile is among the few economies that are overheating, and in their view, it would take a substantial growth slowdown in coming months for the central bank to see merit in beginning easing so soon, particularly when the Fed and much of the advanced world would still be tightening.
BulletEM BulletEmerging Market NewsHomepage
BulletEM BulletEmerging Market NewsHomepage

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.