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CHILE: BCCh Minutes Tomorrow, Focus On External Risks, Desired Monetary Stance

CHILE
BulletEM BulletEmerging Market News
  • The BCCh will publish the minutes to its Jan 28 MPC meeting tomorrow, when it kept its policy rate unchanged at 5.0% in a unanimous decision. The accompanying statement continued to strike a cautious tone, with the Board noting the increase in inflation risks and removing the reference to future rate cuts. This was seen as signalling an extended pause in the easing cycle, with many analysts expecting rates to remain on hold through H1 and potentially room for some renewed easing later in the year.
    • In the minutes, Goldman Sachs will be particularly attentive to the MPC’s assessment of the external backdrop. On the domestic economy, they look for any discussion on the state of the real business cycle. In the post-meeting statement, directors noted that activity surprised to the upside in Q4 but highlighted the weakness in the labour market.
    • GS will also be on the lookout for a discussion on the desired monetary stance, and the extent to which the MPC favours maintaining rates above neutral for longer amid the increase in inflation risks.
    • Directors noted that two-year ahead inflation expectation rose to 3.5% in their most recent survey of traders and today’s BCCh economist survey revealed a 30bp increase in 2025 year-end inflation expectations, to 4.1%.
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  • The BCCh will publish the minutes to its Jan 28 MPC meeting tomorrow, when it kept its policy rate unchanged at 5.0% in a unanimous decision. The accompanying statement continued to strike a cautious tone, with the Board noting the increase in inflation risks and removing the reference to future rate cuts. This was seen as signalling an extended pause in the easing cycle, with many analysts expecting rates to remain on hold through H1 and potentially room for some renewed easing later in the year.
    • In the minutes, Goldman Sachs will be particularly attentive to the MPC’s assessment of the external backdrop. On the domestic economy, they look for any discussion on the state of the real business cycle. In the post-meeting statement, directors noted that activity surprised to the upside in Q4 but highlighted the weakness in the labour market.
    • GS will also be on the lookout for a discussion on the desired monetary stance, and the extent to which the MPC favours maintaining rates above neutral for longer amid the increase in inflation risks.
    • Directors noted that two-year ahead inflation expectation rose to 3.5% in their most recent survey of traders and today’s BCCh economist survey revealed a 30bp increase in 2025 year-end inflation expectations, to 4.1%.