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US and Germany


BLOCK, Ratio Call Calendar

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  • Expect an acceleration of BanRep's tightening cycle and a hike to the policy rate of 50bp.
  • Since the last meeting, inflation crept higher reaching 4.5% y/y, but probably the most important change has been in terms of inflation expectations 12 month ahead, which continued to deteriorate reaching 3.6%, further distancing from the 3.0% target.
  • Additional risks on inflation could come from recent rains and La NiƱa phenomenon that could affect agricultural production and result in higher food prices in the coming months.
  • On the other side, August GDP registered an expansion of 13.2%, which was weaker than we were expecting (14.9%), and adds some risks to our rate call for this month.
  • Nonetheless, the GDP print still points to faster growth in 2021 than estimated by Banrep (8.6%), which implies a faster closing of the output gap. Meanwhile, the labor market has shown further signs of improvements that should make the authorities more comfortable with continuing to reduce the size of the monetary stimulus.