Free Trial

Chile Central Bank Review – July 2022

CHILE
  • The BCCh Board decided to raise the monetary policy interest rate by 75bp to 9.75% in a unanimous vote. This was above the modal forecast within the Bloomberg survey and was against prior guidance that the hiking pace would decelerate from the previous meeting. However, recent developments regarding inflation and the weaker CLP had prompted several analysts to revise their forecasts to more hawkish predictions.
  • Despite the above consensus hike, analysts note that markets had been priced for even bolder action and therefore the Chilean peso may struggle to garner immediate support at the open.
  • Following the central bank’s statement on potential currency intervention, the statement language reiterated that “markets have been able to properly absorb shocks, and volatility in the foreign exchange market has not been transmitted to other segments of the financial system, which have operated with adequate levels of liquidity.”
  • Towards the end of the statement, the BCCh note that currency developments may place further upward pressure on local prices. Omitting any guidance towards the size of future hikes, the board state “estimates that new increases in the MPR will be necessary to ensure the convergence of inflation to 3% in two years.”
  • Link to statement here: https://www.bcentral.cl/documents/33528/3379419/pr_13072022.pdf/1e02d00b-ec58-9d9f-46f8-9660dd28510e?t=1657747849163
  • The minutes of this meeting will be released on July 28. The next Monetary Policy Meeting will be held on Tuesday, September 6.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.