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CHILE: Santander Adjust Year-End Rate Forecast to 5.00%

CHILE
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  • Santander now estimate 25 bp cuts in both October and December, to end at around 5% (vs. 5.25% in their previous report). However, if the external scenario begins to more firmly incorporate the possibility of an economic recession in the US, the Fed repeats the reduction dose at its next meeting in November and domestic demand shows new signs of weakness, Santander do not rule out a more intense BCCh cut in December, of 50 bp.
  • In this environment, international rate movements could imply a further appreciation of CLP, which would help to alleviate inflationary pressures, all of which would reaffirm the position of a more forceful reduction of the MPR in December.
  • The September Monetary Policy Report revised the rate corridor downwards, in the context of lower domestic spending dynamism and better global financial conditions, following the imminent normalization process by the Fed.
  • For 2025, Santander currently estimate cuts of 25 bp at each meeting, reaching the neutral rate of 4% at the beginning of H2.
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  • Santander now estimate 25 bp cuts in both October and December, to end at around 5% (vs. 5.25% in their previous report). However, if the external scenario begins to more firmly incorporate the possibility of an economic recession in the US, the Fed repeats the reduction dose at its next meeting in November and domestic demand shows new signs of weakness, Santander do not rule out a more intense BCCh cut in December, of 50 bp.
  • In this environment, international rate movements could imply a further appreciation of CLP, which would help to alleviate inflationary pressures, all of which would reaffirm the position of a more forceful reduction of the MPR in December.
  • The September Monetary Policy Report revised the rate corridor downwards, in the context of lower domestic spending dynamism and better global financial conditions, following the imminent normalization process by the Fed.
  • For 2025, Santander currently estimate cuts of 25 bp at each meeting, reaching the neutral rate of 4% at the beginning of H2.