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
Executive Summary
- The BCCh are widely expected to continue their aggressive pace of tightening at the March meeting with at least another 150bp hike to the overnight rate.
- However, worsening price dynamics both globally and on the domestic front, have prompted several analysts to forecast even bolder action of up to a 200 basis point interest rate increase at this week’s meeting, potentially bringing the overnight rate to 7.5%.
- Aside from the actual decision, the updated forward guidance will be provided in the quarterly monetary policy report (IPOM), scheduled to be published the day after the committee’s decision and analysts will look for details relating to the short-term trajectory for the policy rate.
Click to view the full preview: MNI BCCH Preview - March 2022.pdf
Rosanna Costa Takes Charge As President
Tuesday’s BCCh meeting will be the first at which Rosanna Costa will chair as newly appointed President. Given the fact she has been a committee member since January 2017, analysts do not expect any notable policy divergences from the committee’s approach under now Finance Minister, Mario Marcel. Additionally, Luis Felipe Céspedes and Stephany Griffith-Jones have also been appointed to the BCCh board, both having been selected by President Pinera in February.
Since the January meeting, speculation had mounted as to whether the BCCh may convene mid-schedule to act on surging inflation. The new central bank head ruled out an emergency meeting to address the high January prints, but warned of higher interest rates at the next policy meeting in March. Costa stated that the committee are “concerned about the evolution of inflation and this is going to require adjustments in monetary policy”. The new president added that “achieving convergence to the target will require a different monetary policy”, emboldening calls for bolder action this week.
Inflation Continues To Spike Amid Soaring Expectations
Annual headline inflation rose to 7.8% in February and while this figure was below surveyed estimates of an 8.2% rise, the numbers are significantly above the 7.2% level seen prior to the January meeting and continues to be significantly higher than the central bank’s target of 3%. In the latest BCCh economist survey, 2023 year-end inflation expectations rose to 4.0% from 3.7%, further indicating the contamination of medium-term expectations. Additionally, and highlighting the growing pressures, the latest central bank trader’s survey indicated one-year ahead expectations have increased to 7.4% from a 5.0% reading prior to the January meeting. They also foresee rates being hiked by 200bps to 7.5% at the March meeting.
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.