Chile's Central Bank Reduces Interest Rate Amid Economic Forecast

Chile's central bank has cut its benchmark interest rate by 25 basis points to 5.75%, aligning with market expectations. The decision comes after a bank analyst poll predicted a rate of 5% in five months. Details on future rate adjustments will be disclosed in the upcoming monetary policy report.

Chile's central bank cut its benchmark interest rate by 25 basis points to 5.75% on Tuesday, in line with market expectations, in a four to one vote with the dissenting board member preferring a 50 basis point cut.

The cut followed an analyst poll from the bank published last week that estimated the interest rate will likely reach 5% over the next five months. In a statement, the central bank noted that if its economic scenario materializes, including expectations for internal demand, copper prices and power rates, the monetary institution will likely accumulate the rate cuts planned for 2024 during the first half of the year.

The bank's next monetary policy report will be published on Wednesday and is set to include "details of the central scenario, the sensitivities and risks surrounding it and its implications for the future evolution" of the key lending rate, according to the statement. The 25-basis-point reduction approved on Tuesday reflects a smaller cut after rate cuts of 50 basis points in May, 75 basis points in April, and 100 basis points in January.

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