January 05, 2023 13:14 GMT
Scotiabank Say Odds Of 100BP Hike Elevated In Jan
- Scotiabank noted that inflation ex-food and regulated prices increased from 8.70% to 9.51%, showing that despite the main contributor to the inflation being food, some demand forces have also pressured core prices higher.
- Today’s inflation surprise has changed Scotiabank’s expectation for BanRep’s policy rate. The odds of a 100bps hike in January BanRep's meeting are now elevated. There is still a chance that inflation reaches a ceiling in Q1-23, mainly due to a historically-high statistical base level.
- If inflation steadies in January and February, Banrep may be allowed to consider a pause at the March meeting to wait and see the effects of the hiking cycle on the economy. However, Scotiabank expect Banrep to continue with a data-dependent approach in January's statement.