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Scotiabank on Chile CPI/BCCh Decision

  • CPI rose 0.9% m/m in September, matching Scotiabank expectations but below projections in the latest central bank survey (1% m/m). With this, annual inflation slowed to 13.7% y/y.
  • In their view, annual inflation will continue to slow in coming months, down to 12.5% y/y at the end of 2022. Next year, lower domestic and external pressures would bring annual inflation towards the central bank’s objective, ending 2023 at 3.7 % y/y.
  • For the central bank, today’s data do not allow a clear diagnosis of a slowdown in inflation beyond the ratification of the drop in y/y figure. The CPI without volatiles remains high while the diffusion (% of goods with m/m increases) at the level of goods and services remains at worrying levels.
  • Consequently, Scotia expect an increase in the benchmark rate next week, where once again the Board will assess whether to approach the terminal rate little by little or move quickly. In their view, the alternatives to be evaluated would be a dose of 25bps or 50bps, respectively.

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