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Scotiabank Highlight Plebiscite Could Be Key Driver For FX & Policy

CHILE
  • Looking ahead to the December 19 meeting, Scotiabank note the exchange rate scenario could change drastically depending on the outcome of the December 17th plebiscite.
  • Although Scotiabank consider that the 50 bps drop could condition an acceleration in the pace of cuts for the next meetings, they do not rule out that in a scenario of strong appreciation (depreciation) of the CLP in response to the plebiscite result, the BCCh will resume a higher (lower) pace of cuts that will bring the reference rate closer (further) to the range between 7.75 and 8% indicated by the Board a few weeks ago.
  • Given that the BCCh would be in charge of pointing out that the exchange rate is for now the main driver of monetary policy, a relevant appreciation would be enough to accelerate declines if it acts symmetrically.

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