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Goldman Sachs on BCCh: Decision More Hawkish Than Statement

CHILE
  • *Goldman Sachs: The decision was more hawkish than the policy statement given that the forward guidance is now somewhat agnostic with regards to the next steps and the MPC underscored that the non-mining activity is now retrenching and the “labor market has lost strength”.
  • Even though there is no explicit forward guidance about future adjustments to the policy rate, in Goldman Sachs’ assessment the MPC remains open to the possibility of further hikes. For one, at least one director judged that the current inflation backdrop warranted an even more hawkish 125bp move. Furthermore, the MPC explicitly mentions upside but not downside risks to inflation and it is also unsettled by the fact that 2-year ahead inflation expectations are tracking above the 3.0% inflation target midpoint.
  • Goldman’s policy rate baseline will be recalibrated based on the overall tone and risk analysis in the September IPoM's central scenario.

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