Chile holds rates, but cuts still likely in late 2020

The statement accompanying the Chilean central bank’s decision to hold interest rates at 1.75% yesterday signalled that policy rates will be left unchanged over Q1, but we still think it’s most likely that rates will be lowered over the next 12 months. We have pushed back the 50bp of cuts in our profile to the second half of 2020. In contrast, the markets are pricing in hikes over the next 12 months.