An intense week is coming, on the eve of one of the most important elections in Chile's recent history, but we are also going to know a series of relevant economic data and publications for the second part of the year, as well as for 2023.

First of all, on Tuesday 30, we will know the employment situation for the mobile quarter ending in July, in which we expect the weakness of this market to continue, probably with a new net destruction of jobs, and also an increase in the unemployment rate, which we estimate to reach 8.0%. This dynamic is only a reflection of the weakness shown by the activity and the poor expectations in this regard, mainly related to investment.

Then, on Thursday 1st, the Central Bank will publish the Imacec for July, which we project will be the last one to show a positive variation in this growth cycle that started in March last year. Thus, the approximately 1.5% YoY that the economy would have grown during the month will be the last important data that the Central Bank will count on for both the monetary policy meeting on Tuesday, July 6, and the IPoM to be published the following day.

With inflation that has not let up (1.4% m/m in July), the Governing Body faces the difficult decision of continuing to tighten monetary policy in a context of weak domestic demand. In any case, we believe that the cards are relatively well played in this regard and, barring something very unexpected, the Board will announce its decision to raise the TPM to 10.5%, mentioning that there will probably be one additional move left, which we project will leave the instance rate at 11% at its October meeting.

In the new macro framework, we see little change to the expected growth for 2022, but we do not rule out a further downward adjustment for 2023, especially in terms of investment. Undoubtedly, the inflation you are projecting should be on the upside, considering that your current scenario seems totally out of context. I think what will be really interesting will be to see your price projection for 2023, considering the lower local pressures, but the uncertain evolution of this phenomenon at a global level. That will be critical in projecting the speed with which he will normalize monetary policy.

Despite the timing, it is unlikely that the report will include substantial changes considering the results of the September 4 plebiscite, regardless of which option wins. This is not only because it will be difficult to draw conclusions that can be based on such a report with so little information, timeframe and high volatility, but also because of the monetary authority's well-known policy of abstaining from this type of events. This does not mean that it will not eventually incorporate what the result implies to incorporate, but this may be a matter for the December IPoM.

Finally, on Thursday 8, a new CPI release, this time corresponding to August, which we project would have increased 0.9% m/m, year-on-year, touching 14%, which would be the peak, at least for the time being. The composition will continue to migrate towards supply components, with the Transport and Food divisions leading the increases.

For now, we can only wait.

Nathan Pincheira, Chief Economist, Fynsa