Chile central bank cuts key rate to 6.5%, sees more easing

• Chile's central bank cut its benchmark interest rate on Tuesday by 75 basis points to 6.50%, in a unanimous decision by its governing board, saying the rate would likely be reduced further.

• The cut is in line with forecasts in a traders' poll last week, which also predicted the bank will reduce the rate to 4.25% within 12 months.

• Chile's central bank raised interest rates from 0.50% in mid-2021 to a cycle-high of 11.25% in late 2022. The bank held at that rate before kicking off monetary easing in July 2023, as inflation began to cool.

• Chile's annual inflation peaked at 14.1% in August 2022 and came down to 3.9% at the end of 2023. It has since gone back up, reaching 4.5% in February.

• The central bank's board on Tuesday added that inflation expectations are aligned with its 3% target, and "rising inflation figures at the beginning of the year and higher imported cost pressures emphasize the need to continue closely monitoring its evolution."

• While Chile faced a sharp economic downturn in 2023 after a rapid post-pandemic recovery, the economy "has succeeded in closing the significant macroeconomic imbalances of previous years," the board said.

(Source: Reuters)