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CHILE: Goldman Sachs Still Forecasting Year-End Rate of 5.00%

CHILE
EM BulletBulletGlobalEmerging Market NewsRegion
  • Following today’s release of the BCCh minutes, Goldman Sachs continue to expect the BCCh to deliver back-to-back rate cuts in October and December interest rates reaching 5.00% at year-end. They also forecast a terminal rate for the cycle at 4.25% in H2 next year.
  • Nevertheless, GS remain cautious about possible shifts in the pace of adjustment. The monetary policy stance is no longer very tight with the real ex-ante rate being only 50-75bp above the Central Bank’s 1% estimate for neutral.
  • Inflation is accelerating and will remain visibly above the BCCh’s target for several months and real economic slack is not significant (the output gap remains around zero and the outlook for activity around the Central bank’s estimate for potential growth).
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  • Following today’s release of the BCCh minutes, Goldman Sachs continue to expect the BCCh to deliver back-to-back rate cuts in October and December interest rates reaching 5.00% at year-end. They also forecast a terminal rate for the cycle at 4.25% in H2 next year.
  • Nevertheless, GS remain cautious about possible shifts in the pace of adjustment. The monetary policy stance is no longer very tight with the real ex-ante rate being only 50-75bp above the Central Bank’s 1% estimate for neutral.
  • Inflation is accelerating and will remain visibly above the BCCh’s target for several months and real economic slack is not significant (the output gap remains around zero and the outlook for activity around the Central bank’s estimate for potential growth).