Chile: As expected, the central bank cut the policy rate by 25bp and moderated its dovish bias

In accordance with consensus expectations, the central bank cut the policy rate by 25bp to 3.25% and moderated the dovish bias. In our view, this option prevailed in the board’s arguments due to weak activity figures and transitory elements behind CPI inflation prints of above 4% YoY. In this context, we still consider that future monetary policy decisions will remain data-dependent on short-term inflation figures; nonetheless we consider that further stimulus is likely to be necessary for the rest of the year (BBVAe: 2.75% at 2014 eop).

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