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CHILE: BBVA Expects BCCh To Remain On Hold Through H1

CHILE
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  • BBVA continues to expect the BCCh to remain on hold for the first half of 2025 but sees it resuming cuts in the second half to a rate of 4.5%, at the top of the neutral range. For now, the CLP is likely to be driven primarily by external factors such as the USD, US rates and the relative momentum of copper prices vs. Brent crude prices.
  • Inflation remains above target and is rising, but it is below central bank forecasts. Meanwhile, accumulated peso depreciation, energy prices and increasing labour costs remain risks.
  • Inflation is set to extend its uptrend in January, driven by a final upward adjustment to electricity prices. Economic activity seems to be painting a less inflationary picture, while CPI base effects will turn more supportive in June.
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  • BBVA continues to expect the BCCh to remain on hold for the first half of 2025 but sees it resuming cuts in the second half to a rate of 4.5%, at the top of the neutral range. For now, the CLP is likely to be driven primarily by external factors such as the USD, US rates and the relative momentum of copper prices vs. Brent crude prices.
  • Inflation remains above target and is rising, but it is below central bank forecasts. Meanwhile, accumulated peso depreciation, energy prices and increasing labour costs remain risks.
  • Inflation is set to extend its uptrend in January, driven by a final upward adjustment to electricity prices. Economic activity seems to be painting a less inflationary picture, while CPI base effects will turn more supportive in June.