Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI Chile Central Bank Preview - April 2023
Executive Summary
- The BCCh is expected to keep the policy rate unchanged at 11.25%.
- Central bank rhetoric combined with ongoing pressure on core inflation and inflation expectations solidifies the likelihood of the committee maintaining its current stance of monetary policy.
- However, with several analyst predictions for easing to commence in Q2 2023 and the latest weak economic activity data, the statement and the central bank’s quarterly monetary policy report will be closely scrutinised for clues on when rate cuts should be expected.
Click to view the full preview:
MNI BCCH Preview - April 2023.pdf
BCCh President Reiterates Rate Hold Pledge
The Central Bank President, Rosanna Costa, has recently reiterated that the domestic economy has adjusted less than expected to tighter monetary policy. Speaking on March 06, Costa stated that “the data that we have seen in recent weeks continues to suggest that the process of convergence of inflation is still likely not consolidated”. Costa reiterated that policymakers would keep borrowing costs steady until there’s greater certainty that inflation will ease to target, adding that the central bank will review its projections in its quarterly monetary policy report, which will be published following the decision on April 05.
Headline Inflation Data Eases, Expectations Remain Elevated
While Costa’s above remarks were largely referring to January CPI data, February’s print provided more optimistic news, registering at 11.9% versus a median surveyed estimate of 12.3% Y/y. However, analysts were quick to point out that core inflationary pressures remain elevated, and the February reading is unlikely to prompt a rate cut in the near term as the Board would favour seeing a consolidated downward trajectory on the core front.
March CPI data will also not be published until April 06 and will therefore be too late to confirm any trend of downside surprises for headline inflation. Furthermore, expectations remain elevated and have marginally deteriorated over the January-March period. The latest central bank survey of economists showed 2023 year-end inflation expectations at 5.2% (20bps higher than before the last BCCh meeting in Jan), declining to 3.4% by 2024 year-end, also 10bps higher than before the prior central bank decision.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.