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Santander Say Data Reduces Chances Of Early Policy Loosening

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  • The diffusion index showed that 64% of the products rose, reflecting that the inflationary persistence continues to be important. Despite the surprise in January, Santander maintain their view that inflation will continue to subside, driven by the appreciation of the exchange rate, the decline in international values, and activity that will continue to weaken.
  • For February they estimate a variation of 0.2%, with significant falls in fuels and reversals of some of the surprises of January. For March, however, there will be a significant increase due to the usual seasonality of the month.
  • The high CPI in January, added to the latest figures for activity and unemployment, which turned out to be more dynamic than those estimated, reduce the chances of an early start in rate cuts by the Central Bank.
  • The BCCh has already mentioned that it is necessary to see a clear convergence of inflation before being able to start the easing process, especially in its underlying components that still seem to show persistence.
  • For the same reason, Santander believe that the reductions in the reference rate will begin to materialize either in the May or June meeting. Once the process begins, Santander believe that the cuts will be large, taking into account the high level of the MPR.
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  • The diffusion index showed that 64% of the products rose, reflecting that the inflationary persistence continues to be important. Despite the surprise in January, Santander maintain their view that inflation will continue to subside, driven by the appreciation of the exchange rate, the decline in international values, and activity that will continue to weaken.
  • For February they estimate a variation of 0.2%, with significant falls in fuels and reversals of some of the surprises of January. For March, however, there will be a significant increase due to the usual seasonality of the month.
  • The high CPI in January, added to the latest figures for activity and unemployment, which turned out to be more dynamic than those estimated, reduce the chances of an early start in rate cuts by the Central Bank.
  • The BCCh has already mentioned that it is necessary to see a clear convergence of inflation before being able to start the easing process, especially in its underlying components that still seem to show persistence.
  • For the same reason, Santander believe that the reductions in the reference rate will begin to materialize either in the May or June meeting. Once the process begins, Santander believe that the cuts will be large, taking into account the high level of the MPR.