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22 Apr 2015
Chilean economy points to higher rates – BBH
FXStreet (Edinburgh) - The research team at BBH expects the Chilean central bank to hike rates in the upcoming periods.
Key Quotes
“The Chilean central bank is gearing up for rate hikes. Indeed, communication by the central bank emphasized that there was no more room for rate cuts”.
“Central bank President Vergara reiterated that the output gap has closed faster than expected and that rate hikes later in the year are on the table”.
“At 4.2% y/y in March, headline CPI inflation remains uncomfortably high given the bank’s 3% ± 1 percentage point target range. Core inflation came in at 0.5%, down from 0.6% in the last two months, but well above the 5-year average of 0.25%”.
“USD/CLP is well off its highs of just over 640 in March, levels not seen since 2008. But despite the more hawkish tone by the central bank, we think pressure on the peso will resume as soon as the bullish dollar trend resumes (which is our base case)”.
Key Quotes
“The Chilean central bank is gearing up for rate hikes. Indeed, communication by the central bank emphasized that there was no more room for rate cuts”.
“Central bank President Vergara reiterated that the output gap has closed faster than expected and that rate hikes later in the year are on the table”.
“At 4.2% y/y in March, headline CPI inflation remains uncomfortably high given the bank’s 3% ± 1 percentage point target range. Core inflation came in at 0.5%, down from 0.6% in the last two months, but well above the 5-year average of 0.25%”.
“USD/CLP is well off its highs of just over 640 in March, levels not seen since 2008. But despite the more hawkish tone by the central bank, we think pressure on the peso will resume as soon as the bullish dollar trend resumes (which is our base case)”.