MNI BRIEF: China Visitor Mobile Payments Surge in H1

MNI China Daily Summary: Friday, July 26

MNI BRIEF: Foreign Firms Content In China

MNI BRIEF: Turkish Inflation Expectations Steady- TEBA

MNI China Press Digest July 26: Deposit Rates, Fiscal, PBOC

MNI: PBOC Net Injects CNY299.05 Bln via OMO Fri

Collective Wages Continue To Tick Higher

Q1 Sectoral Accounts Suggest Solid Real Income Gains

Services Behind Slight Fall In July ISTAT Business Confidence

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

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

SocGen See Heightened Risk Of 75bp July Hike And/Or Tightening Extension

CHILE
  • Inflation has risen further to 11.5% in May (from 10.5% in April) while the current consensus expects it to have reached 12.7% in June. The year-ahead inflation expectations have risen to 6.5% while the 23-month expectations have declined one tick to 3.6%, still well above the BCCh’s target of 3.0%.
  • The near-term inflation projections now face two opposing factors – sharply depreciating currency (-15% since end of May) and a substantial decline in commodity prices (-15.6% since end-May). As the fear of a slowdown in major economies spreads amid tightening financial conditions, these trends could persist in the coming months. As a result, the path of inflation moderation remains highly uncertain even though SG expect it to begin to decline in 3Q22 due to substantial base effects and an improving supply outlook.
  • The economy is contracting sequentially (with negative monthly activity growth in five out of last six readings) but continues to be buoyed a high level of demand, led by stronger-than-expected consumption. The downward adjustment in demand, currently led by weaker investment, is likely to intensify in the coming months. This should cool the labour market further and help bring down core inflation (9.0% yoy in May) over the policy horizon. Nevertheless, with demand remaining strong vs GDP potential, there is no immediate pressure on the central bank to consider policy support.
  • In its June statement, the central bank talked about slowing the pace of tightening going forward and we therefore expect it to raise the policy rate by 50bp to 9.50% in July.
  • Nevertheless, given the changed currency context and the continued rise in inflation, SocGen now see a substantial upside risk that the July rate hike won’t be the last in this tightening cycle. In fact, they see a meaningful possibility of another 75bp hike in July.
BulletEM BulletEmerging Market NewsHomepage
BulletEM BulletEmerging Market NewsHomepage

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.