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 BCCh Preview - May 2022
Executive Summary
- The BCCh are widely expected to continue their tightening cycle at the May meeting, albeit with a smaller hike relative to the last meeting.
- Consensus points toward the monetary policy committee hiking the overnight rate by 100bps to 8.00%.
- However, opposing forces of more dovish prior rhetoric and accelerating inflation dynamics indicate a wider range of potential outcomes for the May meeting.
Click to view the full preview: MNI BCCH Preview - May 2022.pdf
President Costa Notes March Inflation Surprise
At the March meeting, the BCCh delivered a below-consensus hike of 150bps and clearly signalled that there would be a reduction in the pace of future hikes. The messaging was clearly dovish relative to market expectations prompting a dramatic relief rally in the front end of the Camara swaps curve.
The relatively dovish rhetoric seemed to be confirmed by President Costa following the decision, as she reiterated that inflation would keep on increasing over the next few months before CPI starts a downward trend in the second half of the year. However, following the release of the March CPI figures, President Costa described the data as a ‘significant surprise’ and that the BCCh would be analysing the figures with caution.
Annual headline CPI Approaches Double Digits
March CPI printed 1.9% M/m prompting the annual rate to surge to 9.4%, ahead of the median expectation of 8.7% Y/y. Data for April will not be released until May 06, however, early estimates point toward the yearly reading for consumer prices breaching 10.00%.
Additionally, in the latest central bank survey of economists, 2022 year-end inflation forecasts were revised up to 7.8% from 5.8%. Furthermore, 2023 year-end predictions rose to 4.2% from 4.0%, highlighting the continued contamination of medium-term expectations. While inflationary pressures add credence to the BCCh maintaining their 150bp tightening pace, both the latest BCCh economist and traders surveys expect rates to be raised by 100bp to 8.00% on Thursday.
Source: MNI/Bloomberg
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.