Summary of Analyst Reviews Following Tuesday's BCCh Meeting

Below is a brief summary of analyst views following the BCCh decision on Tuesday:

• **Santander: With yesterday’s hike, the MPR reached its highest level (9%) since the nominal rate was used as a monetary policy instrument (August 2001). In its statement, the Council highlights several aspects that point to a relatively hawkish tone. In particular, it explains that activity has slowed down less than expected and that consumption remains resilient.
• Regarding monetary policy, the Council anticipated that "additional adjustments of lesser magnitude in the TPM will be necessary". Santander estimate that in the next RPM in July there will be an additional hike of 50 bp.
• Subsequently, in the RPM at the beginning of September, the Board will have at its disposal inflation data that could already show a moderation together with data that show a greater deterioration in activity.
• Thus, although they refer to future hikes in the plural, it is not ruled out that they should pause in September, so that a possible hike in the next RPM in July could be the last of this cycle.
• **Morgan Stanley: Importantly, the board clarified that the source of the upside inflation surprises was foods, energy and other volatile prices, with core inflation trends coming in closer to their expectations. They also flagged that inflation expectations remain de-anchored.
• MS will carefully analyse the baseline scenario of tomorrow's IPoM but, based on the statement, they keep their call for a terminal rate of 9.50% by July for now.
• Fixed income strategy expects this downside surprise vs. the market to weigh on CLP performance near term. For this reason, they close their Short PEN/CLP but maintain their less constructive view on PEN, expecting further weakening.
• Additionally, they also likely to see front-end rates in Chile shift a bit lower, helping to steepen the 2s10s CLPxCAM curve well above all-time lows of -200bp.
• **Credit Suisse: Credit Suisse think that the most recent BCCh statement likely puts the floor on the policy rate at 9.5%, assuming the minimum two adjustments of 25bps each.
• The bank will remain watchful of the evolution of inflation and its determinants, as it considers that risks continue to be high. The bank stated that it will provide further guidance in the Quarterly Monetary Policy Report.