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 CB Preview - Dec 2021
Executive Summary
- The Chilean central bank is widely expected to continue the aggressive pace of tightening with another 125bp rate hike on Tuesday, bringing the overnight rate to 4.00%.
- The persistent upward surprises in CPI and the deterioration of inflation expectations should prompt the BCCh to continue their pursuit of normalising monetary policy.
- Furthermore, the constructive current/prospective growth scenario and a depreciating peso fuelled by heightened political uncertainty confirms the need for strong action at the December meeting.
Click to view the full preview: MNI BCCh Preview- December 2021.pdf
Annual CPI Climbs Away From BCCh Target, Expectations Deteriorate
The survey median for inflation expectations one-year ahead rose to 4.8% and further evidence of the de-anchoring of medium-term inflation expectations is seen by the two-years ahead forecast rising from 3.3% to 3.5%. Presently, within the central bank’s survey, only expectations three years ahead remain anchored at 3%. Some analysts note; however, given the binary outcome of the election that expectations further out could well be challenged in the near future.
Annual headline inflation has continued its ascent, further distancing itself from the central bank’s target. November CPI printed 0.5% m/m, bringing the annual rate to 6.7%, the highest reading since 2008. This was above the expectation of 6.6% and well above the October reading of 6.0%.
Core CPI excluding volatile items, the BCCh’s favoured core inflation measure came in at 0.75% M/m for November. This translated into the annual reading accelerating to 4.68%.
Source: MNI/Bloomberg
The growth picture overall continues to remain buoyant amid a supportive fiscal backdrop and following on from three rounds of pension withdrawals. Economic activity rose in line with expectations at 15% Y/y with Scotiabank assuming the BCCh will have to adjust up its GDP growth projection for 2021 from the range 10.5–11.5% to a point estimate between 11.5% and 12%. Indeed, Finance Minister Rodrigo Cerda reiterated that he expects the nation’s economy to expand by 3-4% in the next year.
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.