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 - May 2021
The full preview with analyst views can be found here:
MNI BCCH Preview - May 2021.pdf
MNI Point of View: Consolidation Of Upbeat Comms
The Chilean Central Bank are expected to keep their overnight rate unchanged at 0.5%. The positive growth outlook and inflationary pressures prompted a marginal hawkish shift in the central bank's communiqué in March. However, uncertainty surrounding upcoming elections combined with the bank's objective of safeguarding the economic recovery will prompt little policy action at Thursday's meeting.
Election Risk Prompts Domestic Uncertainty
This weekend, Chileans will vote for members of a constituent assembly to draw up a new constitution, as well as elect mayors, city councillors and regional governors. Increased political uncertainty as well as pandemic related effects (both cases and restrictions) are likely to act as a headwind for domestic economic activity. Both factors potentially add further short-term obstacles for laying out any kind of path for normalisation.
CLP, Rates Point to Gradual Hiking Cycle
The Chilean peso has gradually been appreciating since the March central bank meeting. USDCLP rate has moved from roughly 730 to 705 and has been in a consistent downtrend from mid-2020, bolstered most recently by surging copper prices and a constructive global environment. The buoyant Peso certainly creates a degree of leniency for continued loose monetary policy.
The Camara curve continues to price a moderate hiking cycle towards neutral over a 2-year horizon. 2-year Camara swap rates are broadly in line with the prior meeting at ~1.4%, with continued upward pressure stemming from rising U.S. yields.
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.