Chile: Central bank cut the policy rate by 25bp introducing a neutral tone

In accordance with both our and market expectations, the central bank cut the policy rate by 25bp to 3.00% at today’s meeting. In our view, this option prevailed in the board’s arguments due to still weak activity figures and transitory elements behind CPI inflation prints of above 4% YoY. Even though the communiqué changed the dovish tone to neutral as a signal that the central bank is ending its policy rate accommodation, we still consider that further stimulus is likely to be necessary. In this regard, future decisions should remain data-dependent on short-term inflation figures.

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