Chile Tempers Monetary Easing and Signals Cautious Interest Rate Cuts Ahead

-- Chile’s central bank slowed the pace of interest rate cuts and left its options open for the size of future reductions, signaling caution in the face of inflation risks from stronger economic activity and a weaker peso.Trump Got His $175 Million Bond From a Billionaire Fan’s CompanyPolicymakers cut their interest rate by three quarters of a percentage point to 6.5% on Tuesday, as expected by nearly all analysts in a Bloomberg survey.

Central bankers attributed faster inflation at the start of 2024 to a weaker peso, global cost increases and also the adjustment of some local prices. Both economists and traders surveyed by the central bank see annual inflation on target next year. The central bank will publish its latest estimates in its quarterly monetary policy report Wednesday.Central bankers also signaled vigilance on the international economy. In their statement, board members warned of risks to global inflation, including transportation, fuels and services.

“In our view, the BCCh reads more cautious than before, moderating the extreme dovishness seen in the January meeting,” Credicorp Capital analysts Daniel Velandia and Samuel Carrasco wrote in a note on Tuesday.Fed still likely to cut mid-year: Former Fed Vice Chair

Source: Loan Digest (loandigest.net)

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