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CHILE: Itaú Raises 2025 Interest Rate Forecast To 4.50%

CHILE
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  • Following the loss of momentum in activity data at the backend of Q3, Itaú has revised down its 2024 Chile growth forecast by 30bp to 2.2%. The weaker carryover, lower China growth and higher average interest rates and inflation also drives a 20bp downward revision to the 2025 GDP estimate to 1.9%.
  • While Itaú believes that there has been some overshooting in CLP recently, the global scenario is coherent with a weaker currency path. USDCLP is now seen ending next year at 940, up from 870 previously. The higher CLP path as well as the large upside CPI surprise in October results in a higher average inflation scenario, with forecasts for this year and next rising by 20bp each, to 4.7% and 3.5%, respectively.
  • A slower inflation convergence path towards target, and higher global rates are consistent with fewer rate cuts going forward. Itaú expects the BCCh to cut by another 25bp to 5.0% next month but signal a higher rate path in its IPoM compared to September. Itaú now sees the Board taking rates to 4.5% next year (vs. 4.0% previously) and does not rule out pauses during the final run-in, given elevated global volatility.
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  • Following the loss of momentum in activity data at the backend of Q3, Itaú has revised down its 2024 Chile growth forecast by 30bp to 2.2%. The weaker carryover, lower China growth and higher average interest rates and inflation also drives a 20bp downward revision to the 2025 GDP estimate to 1.9%.
  • While Itaú believes that there has been some overshooting in CLP recently, the global scenario is coherent with a weaker currency path. USDCLP is now seen ending next year at 940, up from 870 previously. The higher CLP path as well as the large upside CPI surprise in October results in a higher average inflation scenario, with forecasts for this year and next rising by 20bp each, to 4.7% and 3.5%, respectively.
  • A slower inflation convergence path towards target, and higher global rates are consistent with fewer rate cuts going forward. Itaú expects the BCCh to cut by another 25bp to 5.0% next month but signal a higher rate path in its IPoM compared to September. Itaú now sees the Board taking rates to 4.5% next year (vs. 4.0% previously) and does not rule out pauses during the final run-in, given elevated global volatility.