MADRID, June 17 (EUROPA PRESS) –
The Central Bank of Chile will consider a new reduction in interest rates at its next monetary policy meeting, which will be held this Tuesday, June 18, with the possibility of cutting the rate between 25 and 50 basis points.
In its last meeting, held on May 23, the bank opted for a cut of 50 basis points, taking rates to 6%. This was a smaller reduction than that applied by the entity in the previous three meetings in December, January and April, when cuts of 75 and 100 basis points were applied.
According to the minutes of the May meeting, the bank maintains its monetary policy strategy for the coming months and confirms that interest rates must continue to be reduced, by magnitudes of 50 or 75 basis points, considering them “plausible.” both options.
However, as estimated by financial market actors, consulted in the June 2024 Economic Expectations Survey, a smaller reduction of 25 basis points could occur this Tuesday, taking the rate to 5.75%.
Although in May both options – of 50 or 75 basis points – met the need to continue reducing the rate, reflecting the progress of the economy in resolving the significant macroeconomic imbalances and the process of inflationary convergence, the option of cutting the rate by 50 points clearly dominated when comparing both alternatives.
Furthermore, the option to lower 50 basis points had “the great advantage” that it was widely expected, so it would not cause significant changes in market prices, as the bank has explained.
In this context, it should be noted that inflation in Chile has been rising for two months, after registering a downward trend for 14 consecutive months until February (in that month there was a rebound to fall again in March.
Thus, in May, inflation stood at 4.1% year-on-year, one tenth more than in April. This will be the most recent data that the Central Bank of Chile will have on the table to make its monetary policy decision this Tuesday.
