2023-08-10 22:49:00
Chilean economists lowered their interest rate forecasts by the end of the year after the central bank cut borrowing costs by 1 percentage point and indicated further cuts would follow as inflation subsides.
Although Chile is promoting the green transition, the bonus from a coal-fired generator was the best bet this year
The survey of economic expectations of the Central Bank of Chile to economists published on Thursday, shows that Politicians are expected to cut the benchmark rate to 7.50% in December, below the previous forecast of 8%. The next rate cut would be 100 basis points, while it is expected that annual inflation falls to 4.1% by the end of the yearaccording to the survey.
Chile: the rate cut that surprised investors
Central bankers led by Rosanna Costa surprised investors with cutting rates by one point to 10.25% in July, as headline and core inflation had slowed faster than expected. The move put Chile at the forefront of Latin America’s shift toward monetary easing, while Brazil also cut its rate more than expected this month. Still, some analysts warn that a recent drop in the peso and rising gasoline costs may cause price pressures to take hold.
A rate cut in Chile will drive more gains for peso bonds
How inflation evolves in Chile
annual inflation moderated slightly less than expected in July, to 6.5%, according to statistics released Tuesday. That’s down from a high of more than 14% last year.
This week, The peso hit a year-to-date low and has fallen 5.1% to 857.2 per dollar in the last month alone. A weaker currency could stimulate inflation by making imports more expensive.
However, that drop may prove temporary, as analysts in the central bank survey expect the peso to appreciate to 840 to the dollar in two months.
Translated by Pauline Steffens.
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