Fynsa
The Central Bank decided to keep the rate at 11.25. The question now is when there will be any developments on that front.
As usual, I wanted to summarize our main projections for 2023, at the risk of being overcharged in twelve months' time.
The Central Bank will take into account factors other than inflation in setting its monetary policy, such as the current account deficit, financial conditions, and international trade.
The risk of reducing the MPR and then having to reverse it due to a misreading of the information is much higher than leaving it at 11.25% for longer than appropriate.
It is important to mention that we do not believe that inflation is over and that the risks of persistence and slower normalization are still present.
The important question that arises with respect to the Central Bank's policy is how long monetary tightening will be on hold.
The outcome of the plebiscite should have a positive impact on the markets, under the assumption of lower uncertainty and risk premiums in the future due to the expectation of a more moderate new constitution.
The Chilean economy is in such a state of imbalance that it cannot respond in the way it normally would in this type of situation.
For the fourth consecutive time, the Central Bank modified the bias of the statement, repeating the situation of March and May: a bias that indicated an early end to the hiking cycle, and then eliminated it and raised the rate more than expected.
