Chile Central Bank Cuts Rate 25 Bps, Sees More Easing Ahead

• Chile's central bank on Thursday, October 17, cut its benchmark interest rate by 25 basis points to 5.25%, extending an easing cycle since the middle of last year, and predicted further cuts if the economic picture for the world's top producer of red metal copper remains stable.
• The cut, a unanimous decision in line with forecasts, comes as inflation cools, but as the country faces a challenge to rev up growth. Copper output has been stalling in recent years.
• The bank said that if the economic scenario continued as expected, then the Andean country's interest rate "will see further reductions to meet its neutral level."
• Pantheon Macroeconomics' Chief Latin America Economist Andres Abadia said that he expected more cuts ahead, though greater external risks and shifting domestic conditions meant a pause in the easing cycle could not be ruled out. "For now, we expect further rate cuts in upcoming meetings, targeting at least 4.0% by the late second quarter of 2025," he said. "A pause in the normalisation cycle cannot be ruled out if external conditions deteriorate sharply."
• So far, domestic activity and demand indicators are consistent with forecasts, it said, pointing to a positive mining performance and "relatively stable" consumption and investment.
• Inflation forecasts for the coming year have edged down, it added, after inflation slowed to 4.1% in September, from 4.7% the previous month. The bank also reaffirmed its commitment to a flexible policy to bring inflation towards 3% within the next two years.

(Source: Reuters)