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Analyst Perspectives On Feb CPI Inflation

CHILE
  • JP Morgan note that annual inflation under the BCCh referential splicing is 90bp lower than the official (INE) one at the margin. On the other hand, both Jan and Feb prints brought material upward surprises, explained by core prices. In their view, the higher real ex-ante rate associated with the referential CPI series should dominate, and BCCh should continue its policy rate normalisation, albeit with a smaller 75bp move in April (vs. 100bp expected previously).
  • Goldman Sachs add that under the new CPI and core inflation baskets, annual readings have declined significantly and headline inflation is now tracking within BCCh’s target band. However, core services inflation remains sticky. GS still expect the MPC to continue with its aggressive easing cycle, although higher inflation, stronger activity and recent CLP weakness could weigh on the pace of cuts going forward.
  • Santander point out that the rebound of inflation was concentrated in two divisions that explain more than half of the increase – transport and housing. However, the inflationary surprises could prompt the BCCh to discuss moderating the pace of rate cuts in April. Santander still believe there is a case for BCCh to continue with a firm adjustment process to bring the policy rate closer to its neutral level.
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