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JPMorgan: BanRep Meets With Growth Slowing, But Not CPI Expectations

  • November’s monthly economic activity indicator, ISE, slipped by 0.1%m/m, sa (3.0%oya), delivering the third negative monthly print in a row, and taking the 3m/3m, saar rate down to an almost flat 0.2%. JPM’s call is for ISE, as well as GDP to move into contraction territory.
  • JPMorgan maintain their GDP forecast for two consecutive -2.0%q/q, saar, prints in 4Q22 and 1Q23, and on an annual basis for 8%y/y in 2022 and 0.9%y/y in 2023. Also out last week were November imports, which showed a clear slowing trend at US$6.0bn (CIF), down from the US$7.3bn monthly peak in August, consistent with the slowing in activity. Exports are also slowing, keeping the trade deficit elevated though overall on the path of correction.
  • Meanwhile, BanRep’s analyst survey showed an ongoing strong de-anchoring trend. JPMorgan maintain their 75bp hike call (to 12.75%) despite the ongoing deterioration of inflation expectations, as with some hard proof of economic slowing, the calmer market tone, and the policy rate in restrictive territory JPM think the board will want to signal their intent to wind down the cycle. JPM still see a final 25bp hike to 13% in the March meeting.

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