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BCCh Minutes Due At 1230BST/0730ET

CHILE
  • At the October meeting, Chile’s central bank board unanimously decided to raise the monetary policy interest rate by 50BP to 11.25%.
    • With this action the board estimated “that the monetary policy rate has reached its maximum level of the cycle that began in July 2021, and that it will remain there for as long as necessary to ensure the convergence of inflation to the target over the two-year policy horizon.”
  • Morgan Stanley expect the minutes will shed more light on what the bar is for the board to engage in a final hike, as well as whether the timing of cuts remains the same (late 1Q23).
    • Despite the BCCh's guidance, MS economists continue to call for a final 50bp hike (to a terminal rate of 11.75%) amid heightened risks of further currency weakness against a backdrop of an insufficient adjustment of the current account combined with a volatile global backdrop.
  • Goldman Sachs will be looking first and foremost at the arguments of the different directors on the rationale for such a direct message about the end of the cycle instead of adopting a more flexible and data-dependent stance given the backdrop of elevated macro-financial uncertainty.
    • Likewise, GS will be looking for any indication regarding the set of domestic and external conditions that could prompt the MPC to eventually need to resume the hiking cycle.
    • Finally, GS expect to find a more detailed assessment on the balance of risks for the economy, both internal and external, as well as the MPC’s view on the persistence of the inflationary process and the slowdown in economic activity.
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