The BCCh is widely expected to slow the easing pace further in May and cut the overnight rate by 50bp to 6.00%.
In recent weeks, BCCh President Rosanna Costa has struck a more cautious tone, saying that plans to extend the easing cycle remain intact while highlighting the increased uncertainty in the bank’s scenarios and projections. Despite the increase in global risks, she has indicated that the economy still requires interest rates to fall. However, future rate cuts will be more cautious, and the magnitude and timing of future reductions will be decided on a meeting-by-meeting basis. She also said that inflation expectations remain well anchored, and that the economy has closed its significant macro imbalances of recent years.
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