The December IPoM showed the BCCh revised the neutral rate up 25bp to 3.75%-4.75%, with 4.25% as the new midpoint. The move higher has been an ongoing debate and not fully a surprise. The policy path corridor still shows expectations of a cut to 4.25% in July 2026 but, as a consequence of the new higher neutral rate, removed the final cut previously pencilled in for 2027 that would have taken the rate to 4%.
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