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Scotiabank Says GDP Data Indicates Need For Sharp BCCh Cuts From January

CHILE
  • Chilean GDP released on Friday showed a larger-than-expected 1.2% Q/q contraction that marks the first of a series of negative prints over coming quarters; in year-on-year terms, GDP only expanded 0.3% Y/y.
  • This compared to their Santiago team’s forecast of 0.2% y/y (same as the Bloomberg median).
  • Scotiabank believe the data is reflecting conditions that will require the BCCh to quickly reduce its policy rate starting in January, with a reduction of between 100 and 200bps.
  • Chile’s current account deficit also rose to a record high of USD9.43bn in Q3, up from USD7.89bn in Q2; weighing on the local currency throughout the session.

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