Chile’s central bank cut its benchmark interest rate by 25 basis points to 5.5% on Tuesday, in line with traders’ expectationsand following a unanimous vote.
The Andean country’s rate cut brings the rate down 575 basis points from a high of 11.25% in July 2023.
“Reducing the interest rate to a neutral level will be faster than expected in June,” the bank said in a statement, while also reaffirming its goal of hitting its 3% inflation target within two years.
The institution also pointed out that it sees a lower risk of more medium-term persistency in inflation as related to shocks.
Traders polled by the bank last week estimated Chile’s benchmark rate should be lowered to 4.50% within 12 months, while monthly inflation should hit 0.2% in August and 3.7% over the next 12 months. – Reuters
