Further interest rate cuts still likely in Chile

Interest rates in Chile were cut by 25bp to 3.00% last night and, although the accompanying statement suggests that we may be nearing the end of the easing cycle, we expect further cuts over the next couple of quarters. We’re sticking to our forecast for 50bp of cuts to 2.50% by mid-15 but there is scope for more reductions if the economic outlook deteriorates further. This is significantly below consensus expectations.