MNI BOK WATCH: More Evidence Needed To Cut Rates, Says Rhee

MNI: PBOC Conducts CNY2 Bln Via OMO Thurs; Liquidity Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS THURS

MNI: PBOC Sets Yuan Parity Lower At 7.1339 Thurs; -1.06% Y/Y

CHINA SETS YUAN CENTRAL PARITY AT 7.1339 THURS VS 7.1342

MNI BRIEF: Bank of Korea Keeps Policy Rate At 3.50%

Activity data stronger-than-expected; little impact on near-term monpol

MNI: GERMANY JUNE FINAL HICP +2.5 % M/M, +0.2% Y/Y

MNI: GERMAN JUN CPI +2.2 % Y/Y

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Natixis Expect BCCh To Choose Between 25bp And 50bp Cut In June

CHILE
BulletEM BulletEmerging Market NewsHomepage
  • In Natixis’ view, the unanimous vote by the BCCh board to cut by 50bp last week sent a strong message that policymakers will act with restraint. They expect the BCCh will pay close attention to the level of the Fed funds rate in deciding its monetary policy path. However, this will also depend on USDCLP. A stronger CLP, for example due to copper prices, could somewhat decouple the BCCh from the Fed.
  • Natixis believe that the tone of the statement revealed concerns about growth. Investment just stopped falling, household expectations about their outlook remain negative and non-performing loans continued to rise. They note that the contribution from consumption to Q1 GDP growth was very small and that much of the growth came from changes in inventories, which is likely to dissipate. The economy will therefore certainly benefit from a lower policy rate.
  • They note that the forward-looking statement only hints at further cuts to come. However, the BCCh didn't signal the size of the cuts or the length of the cutting cycle. Natixis believe the decision at the June meeting will be between a 50bp and 25bp cut.
186 words

To read the full story

Close

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.
  • In Natixis’ view, the unanimous vote by the BCCh board to cut by 50bp last week sent a strong message that policymakers will act with restraint. They expect the BCCh will pay close attention to the level of the Fed funds rate in deciding its monetary policy path. However, this will also depend on USDCLP. A stronger CLP, for example due to copper prices, could somewhat decouple the BCCh from the Fed.
  • Natixis believe that the tone of the statement revealed concerns about growth. Investment just stopped falling, household expectations about their outlook remain negative and non-performing loans continued to rise. They note that the contribution from consumption to Q1 GDP growth was very small and that much of the growth came from changes in inventories, which is likely to dissipate. The economy will therefore certainly benefit from a lower policy rate.
  • They note that the forward-looking statement only hints at further cuts to come. However, the BCCh didn't signal the size of the cuts or the length of the cutting cycle. Natixis believe the decision at the June meeting will be between a 50bp and 25bp cut.