- Following tonight’s interest rate decision, the BCCh is scheduled to release its September monetary policy report tomorrow, in which it is expected to revise its growth and inflation forecasts, particularly for this year.
- Goldman Sachs sees the central bank downgrading its 2024 real GDP growth estimate due to weaker-than-expected Q2 growth and the expectation of a softer external impulse ahead. On inflation, GS expects the BCCh to bring forward the shock to electricity tariffs to H2 2024 and H1 2025, compared to the more back-loaded shock anticipated in the June IPoM. In GS’ assessment, higher inflation at year-end could result in a more persistent inflationary process due to backward looking indexation mechanisms.
- All in, GS expects the BCCh to revise their end-2024 headline inflation forecast to 4.5%-4.7% from 4.2% in June and leave their 3.6% forecast for end-2025 unchanged. GS also sees the central bank incorporating something closer to three Fed cuts in a revision to their macroeconomic baseline scenario. Finally, GS anticipates that the MPC could revise their estimate of the real neutral interest rate higher by at least 25bp from the current 1.0% estimate.
CHILE: Goldman Sachs Says BCCh May Raise Real Neutral Rate Estimate
Last updated at:Sep-03 17:22By: Keith Gyles
Chile
- Following tonight’s interest rate decision, the BCCh is scheduled to release its September monetary policy report tomorrow, in which it is expected to revise its growth and inflation forecasts, particularly for this year.
- Goldman Sachs sees the central bank downgrading its 2024 real GDP growth estimate due to weaker-than-expected Q2 growth and the expectation of a softer external impulse ahead. On inflation, GS expects the BCCh to bring forward the shock to electricity tariffs to H2 2024 and H1 2025, compared to the more back-loaded shock anticipated in the June IPoM. In GS’ assessment, higher inflation at year-end could result in a more persistent inflationary process due to backward looking indexation mechanisms.
- All in, GS expects the BCCh to revise their end-2024 headline inflation forecast to 4.5%-4.7% from 4.2% in June and leave their 3.6% forecast for end-2025 unchanged. GS also sees the central bank incorporating something closer to three Fed cuts in a revision to their macroeconomic baseline scenario. Finally, GS anticipates that the MPC could revise their estimate of the real neutral interest rate higher by at least 25bp from the current 1.0% estimate.
