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 - Jan 2022: Hawkish Risks
Executive Summary
- The Chilean central bank is widely expected to continue the aggressive pace of tightening with another 125bp rate hike at its January meeting, bringing the overnight rate to 5.25%.
- The consistent upward trajectory of inflation as well as the deterioration in medium term inflation expectations points toward the BCCh maintaining firm hawkish guidance and continuing to signal a more restrictive stance.
- It is worth noting that surveyed analysts are divided, with a minority forecasting a bolder 150bp hike.
Click to view the full preview: MNI BCCH Preview - January 2022.pdf
President Marcel To Take Up Finance Minister Post
A significant development in the lead up to the January meeting has been the announcement from President-Elect, Gabriel Boric, that Mario Marcel would leave his position as Central Bank President to become the new Finance Minister. Following the announcement, analysts appear unanimous that the decision is significantly fiscally and economically positive for the country, setting a more moderate tone for the incumbent regime. Indeed, this has been widely reflected in local asset prices with equity benchmarks and the currency receiving a boost while yields in the belly and longer end of the curve fell significantly.
Medium-Term Inflation Expectations Point to Further Bold Action
Headline inflation has continued to surprise above forecasts, with the latest December print rising to 7.2% Y/y from 6.7% in November - the highest reading for over 10 years. The bank’s preferred measure of core inflation rose 0.67% M/m which contributed to the annual figure rising to 5.18% Y/y.
Furthermore, there has been a significant deterioration in both short and medium-term inflation expectations. In the latest BCCh survey of economists, two-year ahead forecasts reached 3.7% from 3.5%, providing further evidence of the contamination of longer-term inflation expectations and the need for further aggressive action on the monetary policy front.
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.