Chile Flash: Central Bank continues in a wait and see stance but reinforced the dovish bias

Summary

As expected by both ourselves and consensus, the central bank kept the monetary policy rate at 4% in June. In our view, this option prevailed in the board’s arguments due to annual inflation figures above the tolerance range of 2% to 4%, although it was nonetheless evaluated as a transitory phenomenon in the most likely scenario. In this context, monetary policy decisions will remain data-dependent in the coming months, even though we consider that further monetary stimulus are necessary for the rest of the year (BBVA: 3.25% at 2014 eop) to warrant medium-term inflation figures at 3% YoY. The latter, was reinforced by the maintenance of the dovish bias in yesterday’s communiqué. In this regard, further cuts in policy rate will materialise when inflation starts to ease.

Geographies

Topics