As predicted by analysts: The Council of the Central Bank decided, by unanimity of its members, to reduce the Monetary Policy Rate (MPR) by 50 basis points, going from 6.5% to 6%.
With this, the reference rate for the national financial system reaches its lowest level since March 2022when the organization began to implement strong rate increases to contain inflation.
This movement comes in a context where, as can be seen in the issuing entity’s statement, the national economy has evolved as foreseen in the Report of March. It is also highlighted that the Chilean peso “It has shown a greater appreciation than other comparable currencies” along with a higher copper price.
“The interest rates on loans Shorter terms have continued to reflect the transmission of the MPR declines. Mortgage rates, more linked to long-term rates, remain high. Delinquency has grown in all portfolios,” they maintain in the letter.
In this way, shorter-term loans (such as consumer loans), along with term deposits, will be the first to reflect changes in line with the MPR cut. However, mortgage loans would continue at current levels (high rates), comparable to 2009.
Central Bank reduces the rate by 50 basis points to 6%
At a global level, the Council of the governing body highlights the inflation contraction at a general level, although at a more moderate pace, with the United States resilient in its economy and the rest of the countries with limited economic prospects.
However the management of US monetary policy It continues to be a worrying aspect that largely moves global markets. “Compared to the April meeting, long-term interest rates and stock markets increased moderately in several economies,” they detail.
Regarding raw materials (commodities), the BML copper has appreciated 21% since April meetingtrading for around US$4.9 per pound, while the average barrel of WTI-Brent oil has fallen -6% in the same period of time, reaching a value of approximately US$81.
Chilean economy
On the local side, the Central Bank emphasizes that the economy is evolving as expected in the Report (in general terms), with a GDP that grew 2.3% in annual terms in the first quarter, along with consumption that is increasing again. and gross fixed capital formation that, although it did not grow, stopped the decline at the end of last year.
“The accumulated inflation in March and April was in line with what was forecast in the last Report. In this way, the annual variation of the CPI (spliced reference series) is located at 3.5% for both total and underlying inflation (CPI without volatiles). Regarding inflation expectations in the two years, both the Economic Expectations Survey (EEE) and the Financial Operators Survey (EOF) are at 3%,” they detail.
Finally, the Council, chaired by Rosanna Costa, foresees that the interest rate will continue to suffer cuts. Regarding their magnitude and temporality, the macroeconomic evolution will be taken into account, and its implications for the trajectory of inflation towards the two-year target of 3%.
