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28-Year High Inflation Keeps Pressure On BCCh

CHILE
  • Inflation hit a new 28-year high in July as food and transportation prices surged and the peso plunged to an all-time low during that month, potentially boosting pressure on the central bank to extend its aggressive interest rate hikes.
  • Goldman Sachs following the data: Headline and core inflation prints continue to be high and the outlook for inflation remains challenging. All in all, GS expect inflation to peak in Q3, although elevated and above-target throughout the remainder of the year.
  • The forward guidance provided by the central bank suggests that the terminal rate will be between 10.5% and 11.0%, and GS expect monetary policy to remain tight over the relevant policy horizon given their expectation for stickier inflation as cost pressures (e.g., higher labor costs given accelerating nominal wages) are passed to final consumer prices.
  • Scotiabank also note the pressure on the BCCh as noted yesterday:
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  • Inflation hit a new 28-year high in July as food and transportation prices surged and the peso plunged to an all-time low during that month, potentially boosting pressure on the central bank to extend its aggressive interest rate hikes.
  • Goldman Sachs following the data: Headline and core inflation prints continue to be high and the outlook for inflation remains challenging. All in all, GS expect inflation to peak in Q3, although elevated and above-target throughout the remainder of the year.
  • The forward guidance provided by the central bank suggests that the terminal rate will be between 10.5% and 11.0%, and GS expect monetary policy to remain tight over the relevant policy horizon given their expectation for stickier inflation as cost pressures (e.g., higher labor costs given accelerating nominal wages) are passed to final consumer prices.
  • Scotiabank also note the pressure on the BCCh as noted yesterday: