Central Bank of Chile leaves rates unchanged in July

At its meeting on 31 July, the Central Bank of Chile decided to maintain the monetary policy interest rate at 5.75%. The move surprised market analysts, who had expected a cut.

The Bank’s desire to stay put was likely driven by a desire to assess the impact of past rate cuts, which have totaled 550 basis points over the last year. Moreover, both headline and core inflation were still above the midpoint of the Bank’s 2.0%-4.0% target range in June, the latest month of available data.

The Central Bank stated that the policy rate should continue to be reduced going forward, while simultaneously indicating that the majority of the rate cuts anticipated for 2024 were already implemented in the first half of the year. Most of our panelists see between 25 and 125 extra basis points of cuts by end-2024, though a few see rates unchanged.

Itaú Unibanco analysts commented on the outlook: “Facing higher short-term electricity related inflationary pressures and rising inflation expectations, the BCCh is set to assess their impact along with the overall effects of the tranche of cuts on the inflationary and activity outlook. Our yearend policy rate stands at 5.50%.” Goldman Sachs’ Sergio Armella said: “We see risks to our near-term policy rate path as skewed toward the possibility of just one, rather than two, cuts over the rest of the year.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Chilean interest rate projections for the next ten years from a panel of 31 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Chilean interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Chilean interest rate projections.

Want to get access to the full dataset of Chilean interest rate forecasts? Send an email to info@focus-economics.com.