Internalized. This is how experts define the upward move made this Wednesday by the Central Bank, where it raised the Monetary Policy Rate (MPR) by 75 basis points to 9.75%. And although the market expected a higher rise, since the beginning of the process of increases the market has felt its effects.
According to what was communicated by the Issuer, “the deterioration of global financial conditions has been faster and more intense than expected, reducing the price of raw materials and the market perspectives on global growth”, a scenario that “has led to a strong depreciation of the peso. And they anticipate that these events, in the short term, will cause “an additional rise in domestic prices, in a context in which inflation and its persistence are already high.”
Luis Flores, general manager of STF Capital, points out that the rise was valued by the market during the day, and that “the only volatility has been seen in the exchange rate, mainly due to the sharp drop in copper.” Thus, “we do not see other systemic risks as indicated by the BC”, he comments.
Along these lines, Guillermo Araya, manager of studies at Renta 4, comments that “the market had already internalized this rate. For this reason, we saw a dollar declining during the afternoon. The high inflation data in the US led us to expect a rate hike of this magnitude or even up to 100 basis points all at once”.
In fact, during the day the exchange rate reached $1,031.23, although at the end of the session it closed at $1,011, closing for the second consecutive day above the $1,000 ceiling.
According to Martina Ogaz, an economist at EuroAmerica, “swap rates projected an MPR that would reach a maximum of 11%, a scenario that given the statement is highly probable. On the side of very short-term fixed income rates, there may be some adjustment, albeit modest. Regarding the exchange rate, I think volatility will continue and it will remain at current levels, since there was no announcement on that side either, beyond reiterating what we already knew from the previous statement.”
In a report sent to its clients, Bice Inversiones indicated that “we estimate that the MPR could reach a ceiling in the range of 10% to 11%. In this scenario, from the point of view of investors in local fixed income, we reiterate the importance of maintaining a greater weighting in assets in UF, in this context of greater pressure on short-term prices”.
But what has changed since the process of raising rates by the Central Bank began? For Ogaz, on the one hand “it may be that the UF is more expensive given the persistence of the (inflationary) shock. I estimate that the UF will continue to be a profitable asset given that we will have maximum inflation during this second part of the year”.
For his part, Germán Guerrero, a partner at MBI, points out that “in general, the money markets did not pay anything, now they do. Another thing is in real terms, which is still negative, but at least leaving the money in the checking account today is very expensive.” ”.
Along these lines, Guerrero comments that “here there is a very relevant issue of real versus nominal returns. The most relevant topics are economic and political perspectives. Something more or less than TPM is not relevant. Here the question is whether Chile falls into an abyss or not”, because in the country “things have been getting more complicated. EChile n the issue of the pandemic cost much more than the rest of the world with benefits to the population that on average tripled the average in the globe, that account is paid, to which is added the uncertainty of the new constitution.
According to Araya, “inflation in the US has been a negative surprise and the dollar has appreciated multilaterally, that is, with respect to all global currencies and other assets. The foregoing in light of expectations that the FED will have to be more aggressive in its rate hikes in the remainder of the year. At the local level, despite everything, there has been a fall in the rate of long-term bonds”.
According to the statement from the governing body, the economic framework scenario presents high risks. And for this reason, it describes that “the deterioration of global financial conditions has been faster and more intense than expected, reducing the price of raw materials and the market perspectives on global growth”