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10 Apr 2015
Chilean central bank could hike rates in late 2015 – Scotiabank
FXStreet (Edinburgh) - In light of the upcoming BCCh MPC meeting, Chief Strategist at Scotiabank Eduardo Suarez believes the central bank could tighten its policy towards year-end.
Key Quotes
“The central has recently signaled that it will likely start hiking rates late in 2015, and our sense is that markets have now adjusted to that view (local IRS are pricing in a 25bps by year‐end)”.
“What we will be looking for in the statement is further guidance on what factors will determine the timing of eventual hikes”.
“Given the recent signs we’ve received about FX‐inflation pass‐through, we believe the rationale behind the hawkish shift is likely similar to that which made Banxico tie its policy cycle to the Fed’s (i.e. the potential for the Fed to fuel additional currency weakness)”.
“The BCCh and Banxico are similar in the sense that they are the two central banks among the LATAM FX5 which we believe currently have the loosest monetary policy settings”.
Key Quotes
“The central has recently signaled that it will likely start hiking rates late in 2015, and our sense is that markets have now adjusted to that view (local IRS are pricing in a 25bps by year‐end)”.
“What we will be looking for in the statement is further guidance on what factors will determine the timing of eventual hikes”.
“Given the recent signs we’ve received about FX‐inflation pass‐through, we believe the rationale behind the hawkish shift is likely similar to that which made Banxico tie its policy cycle to the Fed’s (i.e. the potential for the Fed to fuel additional currency weakness)”.
“The BCCh and Banxico are similar in the sense that they are the two central banks among the LATAM FX5 which we believe currently have the loosest monetary policy settings”.