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Goldman Sachs on BCCh Policy Following MPR Release

CHILE
  • The March Monetary Policy Report (IPoM) provided a somewhat dovish forward guidance for the path of monetary policy. The report shows that if the economy's trajectory conforms to the baseline scenario, future increases in the monetary policy rate would be smaller than those made in recent quarters.
  • Moreover, the mid-point level of the policy rate corridor contained in the March IPoM peaks at 7.53% in 3Q2022 (period average) and declines after that, suggesting that the MPC could begin to cut rates by the end of this year. This is considerably below the current market pricing implied by swap contracts.
  • All in all, Goldman Sachs believe the midpoint path for the policy rate corridor is too dovish and expect the policy rate to reach 8.5% in 2022. Their forecast is consistent with the top-end of the policy rate corridor. Moreover, GS do not expect the MPC to deliver any cuts in 2022.
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