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 2024
Executive Summary
- The majority of surveyed analysts believe that the BCCh will accelerate the easing pace again in January and cut the overnight rate by 100bp to 7.25%.
- The larger-than-expected drop of inflation in December, decline of inflation expectations back to target and ongoing weakness in activity justify a further step up in the pace of easing.
- However, exchange rate concerns and the potential desire for policy continuity has prompted some surveyed analysts to forecast another 75bp move.
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MNI Chile Central Bank Preview - Jan 2024.pdf
Headline CPI Inflation Back Into Target Range
One of the most significant developments since the last monetary policy meeting has been the larger-than-expected decline of inflation in December, which saw the headline rate return to the 2-4% target range for the first time since June 2021. Headline inflation declined to just 3.9% y/y in December, from 4.8%, well below the 4.4% consensus. In m/m terms, prices fell by 0.5%, which is in stark contrast to the +0.3% average rise in December over the previous five years. This was driven by declines in ten of the twelve key components, partially offset by an increase in prices for restaurants and hotels, due to the holiday season, and an unchanged reading for tuition fees.
Notably, the decline in the headline rate to 3.9% was also well below the BCCh staff central scenario, which assumed a 4.5% y/y rate for year-end. The 60bp gap and limited demand side inflationary pressure thus opens the door for the Board to consider accelerating the pace of easing again to 100bp, especially when taking into consideration that the next policy meeting won’t take place until early April.
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.