MNI China Daily Summary: Friday, April 26

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Itaú Expect BCCh To Deliver 75bp Rate Cut Next Week

CHILE
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  • Itaú expect the BCCh to step down the pace of rate cuts next week and to reduce the policy rate by 75bp to 6.5%. They note that the central bank will have to incorporate the effects of recent inflation surprises, the new CPI basket, the CLP’s depreciation, revised national accounts, and the changing Fed scenario on the policy strategy.
  • They expect the updated rate path to continue to point to a neutral rate in 2H24, but on a more gradual path, toward the upper end of the nominal range (4.5%). Market prices have trended upward from around 4% early in the year to 4.5%-5.0% recently.
  • Itaú now expect a year-end policy rate of 4.75% (near the upper end of the neutral 3.5-4.0% range), with rate cuts of a smaller magnitude going forward. After a 75bp move on the April 2 meeting, they see cuts of 50bp and 25bp thereafter.
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  • Itaú expect the BCCh to step down the pace of rate cuts next week and to reduce the policy rate by 75bp to 6.5%. They note that the central bank will have to incorporate the effects of recent inflation surprises, the new CPI basket, the CLP’s depreciation, revised national accounts, and the changing Fed scenario on the policy strategy.
  • They expect the updated rate path to continue to point to a neutral rate in 2H24, but on a more gradual path, toward the upper end of the nominal range (4.5%). Market prices have trended upward from around 4% early in the year to 4.5%-5.0% recently.
  • Itaú now expect a year-end policy rate of 4.75% (near the upper end of the neutral 3.5-4.0% range), with rate cuts of a smaller magnitude going forward. After a 75bp move on the April 2 meeting, they see cuts of 50bp and 25bp thereafter.