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MNI Chile Central Bank Preview - June 2021: Continuation Of More Hawkish Rhetoric

Analysts expect the overnight rate to be left unchanged at 0.5%. Resilience in the economy should prompt further growth upgrades and an alteration to the forward guidance at the June Monetary Policy Report.

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The full preview with analyst views can be found here:

MNI BCCH Preview - June 2021.pdf

Continuation Of More Hawkish Rhetoric – The Chilean Central Bank are expected to keep their overnight rate unchanged at 0.5% on Tuesday. Further improvements to the overall outlook point towards the economy operating at the top end of the central bank's most optimistic expectations, previously outlined in the March Monetary Policy Report (IPOM). Clear communication within the minutes from the May meeting have led the majority of analysts to expect an alteration to the guidance for the path of rates at the June IPOM, due to be released on June 9th.

Further Likely Upgrades To Growth Outlook

Economic Activity (IMACEC) for April surprised to the upside. The annual figure rose significantly above expectations to 14.1% versus and estimate of 10.4%. The monthly figure fell just 1.4% against consensus for a 4% dip underscoring the resilience of the economy. With almost 80% of the population under lockdown throughout April, activity proved resoundingly more robust than in 2020.

MNI/Bloomberg

Predicted loosening of mobility restrictions, enhanced public support measures and a continued positive evolution of the external environment should bolster the likelihood of further upgrades to the Chilean outlook and clear guidance for rate lift-off in 2021.