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CHILE: Santander Note The BCCh’s Tactical Decision

CHILE
  • In Santander’s view, the arguments provided by the BCCh could also be valid for continuing with the cuts. In particular, the weakness in economic activity and the fragility of the labour market with limited employment growth and weak labour demand indicators, all in a context of less tight external financial conditions. 
  • Thus, this decision seems rather tactical. Moreover, the fact of having maintained the rate at this meeting and given that there will not be another decision until September, gives more room to consider not only an additional reduction, as suggested by the central point of the last corridor.
  • Given the necessary boost that activity requires, Santander continue with their view that the TPM would end at 5.25% in 2024, with a rate adjustment in September and another in December.

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