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Scotiabank Expecting Another 50BP BCCh Cut in June

CHILE
  • What is new is the bias: the flexibility of monetary policy is reaffirmed, after having eliminated the said adjective in April’s meeting. In this context, Scotiabank’s view is confirmed that the BCCh would continue with the process of cuts in line with what is reflected in the rate corridor of the March IPoM, but open to making adjustments in magnitude and timing in accordance with short-term data.
  • Scotiabank expect a new cut of 50bps at the June meeting that will be accompanied by a new IPoM where they hope that the BCCh will analyze in detail the implications of the improvement in the terms of trade and the short-and medium-term effect of the appreciation of the exchange rate.
  • Scotiabank estimate that the BCCh evaluated the 75bps cut options and 50bps, eliminating outright a 25bps cut. The rejection of the 75bps option would have been justified in an economic activity and inflation scenario in line with the base scenario that contemplated 50bps.
  • Scotiabank reaffirm their policy rate expectation as of December 2024 between 4.5% and 5.0%, marginally below the central scenario of the current interest rate corridor.
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