Chile: room for interest rate cuts this year is narrowing

The Monetary Policy Report released by Chile’s central bank today alongside the communications to yesterday’s policy meeting suggest that the easing cycle over the next few quarters will be stop-start. We now expect a pause at the central bank’s next two meetings and that the policy rate will be lowered to 5.25% by year-end (4.75% previously). That said, although easing will be a bit more gradual than we’d previously anticipated, we still expect rates to return close to their neutral level by end-2025.