Chile expected to Hold Key Rate at 11.25%

As the economy of Chile continues to show signs of resilience, the country’s central bank is expected to keep its benchmark interest rate unchanged for a second consecutive meeting.

Despite this, many traders predict that a easing cycle will begin in April, with a reduction of half a percentage point, as the economic downturn is expected to deepen and consumer price pressures decrease.

However, opinions vary on the extent of rate cuts, with some financial services companies expecting cuts as much as 200 basis points, while others believe reductions may not start until later in the year.

The central bank, led by President Rosanna Costa, is navigating Chile through a gradual slowdown while also dealing with an inflationary shock. Policymakers raised rates by 10.75 percentage points before signaling a pause in October.

Despite a boost from a stronger peso, economists and traders still anticipate that consumer prices will rise above the 3% target over the next two years.