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Chile Policy Interest Rate 6.0% (consensus 6.0%) in May-24

• The Central Bank of Chile reduced its policy rate by 50 basis points to 6.0%, matching consensus expectations, as global inflation moderates and financial markets adjust to evolving Federal Reserve policies.
• Chile's financial market mirrored global trends, with increases in long-term rates and stock prices, a significant appreciation of the peso due to rising copper prices, and mixed credit conditions reflecting both the MPR cuts and persistent high mortgage rates.
• Future interest rate cuts are anticipated, contingent on the macroeconomic scenario and inflation trends, with the Board committed to maintaining flexibility to ensure projected inflation aligns with the 3% target over a two-year horizon.

Chile Policy Interest Rate 6.5% (consensus 6.5%) in Apr-24

• The Central Bank of Chile reduced its MPR by 75 basis points to 6.5%, aligning with consensus expectations amid downward global inflation trends, yet noting risks from transportation and fuel costs.
• Domestically, the economy shows mixed signals with better-than-expected activity but subdued demand and investment, alongside an economy reflecting global financial market trends with adjustments in interest rates and currency depreciation.
• The Board anticipates further reductions in the MPR, considering the macroeconomic scenario and inflation trajectory, emphasizing the need for a flexible policy approach in response to transient inflationary pressures and external economic risks.

Chile CPI Inflation 0.6% m-o-m (consensus 0.2%) in Feb-24

- Chile's CPI inflation only slowed slightly to 0.6% month-on-month in February 2024, surpassing the consensus forecast of 0.2%.
- All but one inflation print in the past six months has been consistent with above-target inflation, which is worrying persistence.

Chile Policy Interest Rate 7.25% (consensus 7.25%) in Jan-24

• The Central Bank of Chile cut the MPR by 100 basis points to 7.25%, matching consensus forecasts, amid declining global inflation, U.S. economic resilience, and regional geopolitical tensions impacting financial markets.
• Domestically, the decision reflects a response to rapid declines in inflation rates, modest economic growth, and continued restrictive credit conditions, coupled with a depreciating peso and stable stock market performance.
• Looking forward, the Council anticipates an earlier convergence to the 3% inflation target and plans to adjust the MPR towards a neutral stance by the latter half of 2024, maintaining flexibility to respond to evolving macroeconomic conditions and potential risks.