MNI Chile CB Review – Dec 25: 25bp Cut, Further Easing Seen

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Executive Summary

• The Board of the Central Bank of Chile decided to cut the monetary policy interest rate by 25bp to 4.50%, as expected, in a unanimous decision.
• The move came on the back of a faster-than-expected decline of inflation amid a more supportive local and global backdrop, where the risks to inflation convergence have diminished.
• The Board is data dependent and will assess further rate adjustments based upon the implication for inflation convergence. Most analysts still see scope for further easing towards neutral ahead, with at least one cut to follow, perhaps in the first quarter of next year.
• The central bank’s Q4 Monetary Policy Report will be published at 1200GMT/0700ET today.