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JPMorgan On BCCh Policy Following Minutes

CHILE
  • JPMorgan noted that the 50bp option was adopted unanimously for the policy rate to converge to 11.25%, a level that is high enough to secure convergence to 3% by the policy horizon given the current macro backdrop. In the eyes of the Board, the decision to hike 50bp also “made it easier to give a clearly neutral bias to the next rate movement " and allowed emphasizing the policy rate would be kept stable for as long as necessary to ensure the convergence of inflation to 3% within the two-year policy horizon.
  • JPMorgan’s base case assumes the policy rate remains unchanged at 11.25% until early 3Q23, declining to 8.5% by December 2023. Such a nominal policy rate would still be consistent with an ex-post real rate close to 3%, and ex-ante rates around 4.0% and 3.3% when deflating by JPM forecasts for inflation 12- and 24-m ahead, respectively.

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