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Central Bank Minutes Due 1330BST/0830ET

CHILE
  • The BCCh are scheduled to release the minutes of their March 29 meeting where they hiked the MPR by 150bps to 7.00%, which was below consensus expectations for the decision. Additionally, in a dovish development, the statement signalled that future tightening would be of a smaller magnitude, if “the assumptions of the baseline scenario of the March IPOM are validated”.
  • **Goldman Sachs: The March IPoM confirmed the central bank's dovish tone. The mid-point level of the policy rate corridor contained in the report peaks at 7.53% in 3Q2022 (period average) and declines after that, suggesting that the MPC expected to begin to cut rates by the end of this year.
  • GS flagged the 5.6% end-2022 forecast for headline inflation following the report as optimistic and the very high and higher-than-expected 1.9% m/m March inflation print reaffirmed their view. Moreover, headline and core inflation are already above the March IPoM baseline forecast following the March inflation print.
  • Although the value of the MPC minutes was diluted by the lengthier and more detailed IPoM discussion of the outlook for monetary policy, GS will be looking for a possible debate on the arguments that led the MPC to adopt a more dovish stance. In addition, GS will look for a potential discussion on why the central bank anticipates inflation to significantly moderate during 4Q’22 and the importance that Board members assign to the slowdown of economic activity (output gap closing by the end of 2022 from +5.6% of GDP in 4Q2021) and its effect on inflation dynamics.
  • Overall, GS also expect the Committee to acknowledge the complex macroeconomic environment and the high degree of uncertainty. They therefore expect to see a discussion on the set of conditions that would prompt the MPC to deviate from their baseline path for monetary policy and adopt a more restrictive monetary policy stance.
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