Chile

Chile

In a broadly neutral statement – and as expected – the Central Bank of Chile (BCCh) kept its policy rate unchanged at 5.0%. The board maintained its data-dependent stance and further reinforced our call for the bank to remain on hold for the foreseeable future.

On the external front, the board’s view remained largely unchanged. Particularly, the bank acknowledged the recently implemented BoJ program aimed at weakening the yen and noted the continued appreciation of the peso in multilateral terms. However, in our opinion, it is important to put this in the context of the central bank’s most recent assessment (IPoM) wherein it stated the FX was not misaligned.

Furthermore, the statement makes note of credit conditions having turned more restrictive and acknowledged that activity in February was below expectations. In our view, this should not be read as signalling concerns about growth as weakness in February is expected to have been temporary and due, in part, to the calendar effect. The statement also displayed the board as being not concerned about inflation, given that the main measures remain below the target.