Chile: The central bank is expected to remain on hold today.

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics
Daily Latam Spotlight | 13 Dec 2012 06:00 |

Chile: The central bank is expected to remain on hold today.

CHILE

The central bank is expected to remain on hold today. BCCh will have its monthly monetary policy meeting this afternoon. We forecast no changes, in line with trends throughout most of the year. The consensus agrees with this view.

In the statement was released after the November meeting, the central bank kept the neutral bias unchanged. This signals no changes in the policy rate near term, in line with our long-standing forecast. It will be interesting to read BCCh’s characterization of the recent moderation in growth (in sequential terms). Note that the monetary authority highlighted recent risks for the medium-term inflation outlook stemming from steadily above-potential growth performance.

The bi-monthly survey of financial market participants showed few changes, as expected. According to the latest bi-monthly survey of financial market participants, inflation is seen returning to positive territory in December, but remaining low at 0.1% m/m. For the next 12 months, inflation is now seen at 2.9% (slightly up from 2.8%). The 1y/1y estimate, meanwhile, stood unchanged exactly at the 3% target.

The policy rate outlook was unchanged in early December. No policy rate changes are expected near term. In contrast, one 25bp hike is pencilled in the median 24-month-ahead rate forecast.

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